(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)

Mark L. Weintrub, Esq.

Senior Vice President, Chief Legal Officer, and Secretary

GNC Corporation

300 Sixth Avenue

Pittsburgh, Pennsylvania 15222

(412) 288-4600

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies of All Communications to:

Randall G. Ray, Esq.

Kirk A. Davenport II, Esq.

Gardere Wynne Sewell LLP

Latham & Watkins LLP

1601 Elm Street, Suite 3000

53rd At Third

Dallas, Texas 75201

885 Third Avenue

(214) 999-4544/(214) 999-3544 (Facsimile)

New York, New York 10022-4834

(212) 906-1200/(212) 751-4864 (Facsimile)

Approximate date of commencement of proposed sale to the
public: As soon as practicable after this registration
statement becomes effective.

If the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box. o

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o

If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o

If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o

CALCULATION OF REGISTRATION FEE

Proposed Maximum

Amount of

Aggregate Offering

Registration

Price(1)(2)

Fee

Common Stock $0.01 par value

$400,000,000

$42,800

(1)

Includes shares that the underwriters have the option to
purchase to cover overallotments, if any.

(2)

Estimated solely for the purposes of calculating the
registration fee pursuant to Rule 457(o) under the
Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until this Registration Statement shall
become effective on such date as the SEC, acting pursuant to
Section 8(a), may determine.

The information in this prospectus is
not complete and may be changed. We may not sell these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated
June , 2006

PROSPECTUS

Shares

GNC Corporation

Common Stock

This is GNC Corporations initial public offering of its
common stock. We are
selling shares
and shares
are being sold by our stockholders. We will not receive any
proceeds from the sale of our common stock by the selling
stockholders.

No public market currently exists for our common stock. We will
apply to list our common stock on the New York Stock Exchange
under the symbol GNC. We anticipate that the initial
public offering price of our common stock will be between
$ and
$ per
share.

Investing in our common stock involves risk. See
Risk Factors beginning on page 12 of this
prospectus.

Per Share

Total

Public offering price

$

$

Underwriting discount

$

$

Proceeds, before expenses, to GNC Corporation

$

$

Proceeds, before expenses, to the selling stockholders

$

$

The selling stockholders have granted the underwriters a
30-day option to
purchase up
to additional
shares of common stock at the public offering price, less the
underwriting discount, to cover overallotments, if any. We will
not receive any proceeds from the exercise of the overallotment
option.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.

Through and
including ,
2006 (the 25th day after the date of this prospectus), all
dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers obligation
to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with
information that is different from that contained in this
prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy shares in any jurisdiction where
an offer or sale of shares would be unlawful. The information in
this prospectus is complete and accurate only as of the date on
the front cover regardless of the time of delivery of this
prospectus or of any sale of shares.

Throughout this prospectus, we use market data and industry
forecasts and projections that we have obtained from market
research, publicly available information, and industry
publications. The industry forecasts and projections are based
on industry surveys and the preparers experience in the
industry, and we cannot give you any assurance that any of the
projected results will be achieved.

We own or have rights to trademarks or trade names that we use
in conjunction with the operation of our business. Our service
marks and trademarks include the
GNC®
name. Each trademark, trade name, or service mark of any other
company appearing in this prospectus belongs to its holder. Use
or display by us of other parties trademarks, trade names,
or service marks is not intended to and does not imply a
relationship with, or endorsement or sponsorship by us of, the
trademark, trade name, or service mark owner.

The contents of our website, www.gnc.com, are not a part of this
prospectus.

We refer to the terms EBITDA and Adjusted EBITDA in various
places in this prospectus. For the definitions of EBITDA and
Adjusted EBITDA and a reconciliation of net income to EBITDA and
EBITDA to Adjusted EBITDA, see note (1) to Summary
Consolidated Financial Data.

This summary highlights the information contained in this
prospectus. Because this is only a summary, it does not contain
all of the information that may be important to you. For a more
complete understanding of the information that you may consider
important in making your investment decision, we encourage you
to read this entire prospectus. Before making an investment
decision, you should carefully consider the information under
the heading Risk Factors and our consolidated
financial statements and their notes in this prospectus. Unless
the context requires otherwise, we, us,
our, and GNC refer to GNC Corporation
and its subsidiaries and, for periods prior to December 5,
2003, our predecessor. See Business  Corporate
History. References to our stores refer to our
company-owned stores and our franchised stores. References to
our locations refer to our stores and our
store-within-a-store locations at Rite
Aid®.

GNC Corporation

With our worldwide network of over 5,800 locations and our
www.gnc.com website, we are the largest global specialty
retailer of health and wellness products, including vitamins,
minerals, herbal, and specialty supplements (VMHS),
sports nutrition products, and diet products. We believe that
the strength of our
GNC®
brand, which is distinctively associated with health and
wellness, combined with our stores and website, give us
unmatched reach to consumers and uniquely position us to benefit
from the favorable trends driving growth in the nutritional
supplements industry and the broader health and wellness sector.
We derive our revenues principally from product sales through
our company-owned stores, franchise activities, and sales of
products manufactured in our facilities to third parties. Our
broad and deep product mix, which is focused on high-margin,
value-added nutritional products, is sold under our GNC
proprietary brands, including Mega
Men®,
Ultra
Mega®,
Pro
Performance®,
and Preventive
Nutrition®,
and under nationally recognized third-party brands. For the
12 months ended March 31, 2006, we generated revenue
of $1.4 billion and Adjusted EBITDA of $129.2 million.
For the first quarter of 2006, we generated revenue of
$386.9 million and Adjusted EBITDA of $42.6 million.

We have a unique business model that has enabled us to establish
significant credibility and brand equity with both our vendors
and our customers. Our domestic retail network, which is
approximately nine times larger than the next largest
U.S. specialty retailer of nutritional supplements,
provides an unmatched platform for our vendors to distribute
their products to their target consumer. This gives us
tremendous leverage with our vendor partners and has enabled us
to negotiate product exclusives or first-to-market
opportunities. In addition, our in-house product development
capabilities enable us to offer our customers proprietary
merchandise that can only be purchased through our stores or our
website. As the nutritional supplement consumer often requires
knowledgeable customer service, we also differentiate ourselves
from mass and drug retailers with our well-trained sales
associates. With our expansive retail network, our
differentiated merchandise offering, and our quality customer
service, we offer our customers convenience, value, and service
resulting in a unique shopping experience.

Industry Overview

We operate within the large and growing U.S. nutritional
supplements retail industry. According to Nutrition Business
Journals Supplement Business Report 2005, our industry
generated an estimated $21.0 billion in sales in 2005, and
grew at a compound annual growth rate of 5.5% between 1997 and
2004. Our industry is also highly fragmented, and we believe
this fragmentation provides larger operators, like us, the
ability to compete more effectively due to scale advantages.

We expect several key demographic, healthcare, and lifestyle
trends to drive the continued growth of our industry. These
trends include:



a broader consumer awareness of health and wellness issues and
the benefits of nutrition and supplementation, given the desire
to live longer, healthier lives and maintain an improved quality
of life;

the increasing number of Americans over the age of 65, a group
that we believe is significantly more likely to use VMHS
products than other consumers;



rising healthcare costs, increasing incidence of medical
problems, and concerns over the use and effects of prescription
drugs, which we believe will drive increased use of preventive
measures including alternative medicines and nutritional
supplements; and



the growing number of fitness-oriented consumers, at
increasingly younger ages, who demand sports nutrition products
to increase energy, endurance, and strength during exercise and
to aid recovery after exercise and promote muscle growth.

Our Strategic Repositioning

In 2005, we undertook a series of strategic initiatives to
enhance our business and establish a foundation for stronger
future performance. These initiatives have allowed us to
capitalize on our national footprint, brand awareness, and
competitive positioning to improve our overall performance.
Specifically, we:



introduced a single national pricing structure in order to
simplify our pricing approach and improve our customer value
perception;



developed and executed a national, more diversified marketing
program focused on competitive pricing of key items and
reinforcing GNCs well-recognized and dominant brand name
among consumers;

revitalized vendor relationships, including their new product
development activities and our exclusive or first-to-market
access to new products;



realigned our franchise system with our corporate strategies and
re-acquired or closed unprofitable or non-compliant franchised
stores in order to improve the financial performance of the
franchise system;



reduced our overhead cost structure; and



launched internet sales of our products on www.gnc.com.

Since implementing these strategic initiatives, we have seen a
meaningful improvement in our operating results. Since the first
quarter of 2005, domestic company-owned same store sales have
improved with each successive quarter of the year, culminating
in an 8.1% increase in the fourth quarter of 2005. In the first
quarter of 2006, domestic company-owned same store sales
increased 14.5%. Given the significant operating leverage in our
business, Adjusted EBITDA grew by 51.1% in the first quarter of
2006 compared to the first quarter of 2005. We believe these
initiatives will continue to allow us to capitalize on our
brand, worldwide network, value-added products, and aided
shopping experience to grow our business.

The following charts illustrate, for the year ended
December 31, 2005, the percentage of our net revenue
generated by our three business segments and the percentage of
our net U.S. retail revenue generated by our product
categories:

2005 Net Revenue by Segment

2005 Net Retail Revenue by Product Category

For the three months ended March 31, 2006, net revenue by
segment was Retail 76%, Franchise 16%, and Manufacturing/
Wholesale 8%. Net U.S. retail revenue by product category
was VMHS 39%, Sports 35%, Diet 17%, and Other 9%. Throughout
2005 and the first quarter of 2006, we did not have any
meaningful concentration of sales from any single product or
product line. We believe this baseline of sales from which we
now operate is a solid, recurring base from which we will
continue to grow our revenues. Our sales trends in the first
half of 2005 were impacted by a decline in diet products related
to the slowdown of the low-carbohydrate diet trend. Excluding
the diet category, we have generated positive same store sales
for seven of the last nine quarters since the beginning of 2004.

Retail Locations. Our retail network represents the
largest specialty retail store network in the
U.S. nutritional supplements industry according to
Nutrition Business Journals Supplement Business Report
2005. As of March 31, 2006, there were 5,817 GNC locations
globally, including: (1) 2,529 company-owned stores in the
United States (all 50 states, the District of Columbia, and
Puerto Rico); (2) 132 company-owned stores in Canada;
(3) 1,123 domestic franchised stores; (4) 873
international franchised stores in 45 other international
markets; and (5) 1,160 GNC store-within-a-store
locations under our strategic alliance with Rite Aid
Corporation. Most of our company-owned and franchised
U.S. stores are between 1,000 and 2,000 square feet
and are located in shopping malls and strip centers. Our leading
market position is a relatively unique phenomenon in specialty
retailing, as we have approximately nine times the domestic
store base of our nearest U.S. specialty retail competitor.

Website. In December 2005, we also started selling
products through our website, www.gnc.com. This additional sales
channel has enabled us to market and sell our products in
regions where we do not have retail operations or have limited
operations. Some of the products offered on our website may not
be available at our retail locations, thus enabling us to
broaden the assortment of products offered to our customers. The
ability to purchase our products through the internet also
offers a convenient method for repeat customers to evaluate and
purchase new and existing products. To date, we believe that a
majority of the sales generated by our website are incremental
to the revenues from our retail locations.

Franchise Activities. We generate income from franchise
activities primarily through product sales to franchisees,
royalties on franchise retail sales, and franchise fees. To
assist our franchisees in the successful operation of their
stores and to protect our brand image, we offer a number of
services to franchisees including training, site selection,
construction assistance, and accounting services. We believe
that our franchise program enhances our brand awareness and
market presence and will enable us to continue to expand our
store base internationally with limited capital expenditures on
our part. Over the last year, we realigned our franchise system
with our corporate strategies and re-acquired or closed
unprofitable or non-compliant franchised stores in order to
improve the financial performance of the franchise system.

Store-within-a-Store Locations. To increase brand
awareness and promote access to customers who may not frequent
specialty nutrition stores, we entered into a strategic alliance
with Rite Aid in December 1998 to open our GNC
store-within-a-store locations. Through this strategic alliance,
we generate revenue

from fees paid by Rite Aid for new store-within-a-store
openings, sales to Rite Aid of our products at wholesale prices,
the manufacture of Rite Aid private label products, and retail
sales of consignment inventory. In May 2004, we extended our
alliance with Rite Aid through April 2009, with Rite Aids
commitment to open 300 new store-within-a-store locations by the
end of 2006. As of March 31, 2006, Rite Aid had opened 183
of these 300 new store-within-a-store locations.

Products. We offer a wide range of nutritional
supplements sold under our GNC proprietary brand names and under
nationally recognized third-party brand names. Sales of our
proprietary brands at our company-owned stores represented
approximately 47% of our net retail product revenues for 2005.
We generally have higher gross margins on sales of our
proprietary brands than on sales of third-party brands. The high
percentage of proprietary branded sales is a testament to the
value and quality perception of the GNC brand name by its
consumers.

Marketing. We market our proprietary brands of
nutritional products through a nationally integrated marketing
program that includes television, print, and radio media,
storefront graphics, direct mailings to members of our Gold Card
loyalty program, catalogs, and point of purchase materials.

Manufacturing and Distribution. With our technologically
sophisticated manufacturing and distribution facilities
supporting our retail stores, we are a vertically integrated
producer and supplier of nutritional supplements. By controlling
the production and distribution of our proprietary products, we
believe we can better control costs, protect product quality,
monitor delivery times, and maintain appropriate inventory
levels.

Competitive Strengths

We believe we are well positioned to capitalize on the emerging
demographic, healthcare, and lifestyle trends affecting our
industry. Our competitive strengths include:



Unmatched National Specialty Retail Footprint. According
to Nutrition Business Journals Supplement Business Report
2005, we have approximately nine times the number of domestic
locations as our next largest U.S. specialty retail
competitor. Our relative size provides us with significant
buying, advertising, sourcing, and new product development
advantages versus our U.S. specialty retail competitors. In
addition, we believe our extensive mix of brands and products
and aided customer service provide us with meaningful advantages
over mass merchandisers. In addition to our U.S. presence, we
also have a worldwide network of over 1,000 locations in 45
other countries.



Largest Health and Wellness Brand with Strong Credibility.
We believe we are uniquely recognized as a leader in the
health and wellness retail product sector. According to the GNC
2005 Awareness Tracking Study Report commissioned by GNC from
Parker Marketing Research, an estimated 90% of the
U.S. population recognizes the GNC brand name as a source
of health and wellness products. In addition, we have over four
million customers who are members of our Gold Card loyalty
program as well as a strong sports nutrition customer base,
which is the fastest growing category of our industry.



Ability to Leverage Existing Retail Infrastructure. Our
existing store base, the stable size of our workforce, and our
vertically integrated structure with an established distribution
network and manufacturing capacity can support higher sales
volume without adding significant incremental costs, and enable
us to convert a high percentage of our net revenue into cash
flow from operations. In addition, our stores require only
modest capital expenditures, allowing us to generate significant
free cash flow before debt amortization.



New Product Development. We believe that new products are
a key driver of customer traffic and purchases. Our new product
development is focused on blockbuster items and
condition-specific issues in order to capitalize on concerns
over rising healthcare costs and prescription drugs. We also
have a strong internal development and science team which is
complemented by relationships with

Partner of Choice to Leading Industry Vendors. Our brand
credibility and worldwide distribution network have led to our
strong relationship with industry-leading vendors. As a result,
we believe we are the retailer of choice for new product
introductions, are often able to negotiate periods of
exclusivity for new products, and benefit from significant
marketing expenditures by our vendors.



Experienced Management Team. Our senior management, who
have been employed with us for an average of over 12 years,
and our board of directors are comprised of experienced retail
executives. As of March 31, 2006, after giving effect to
this offering, our management would have owned or had options to
purchase
approximately %
of our fully diluted common stock.

Business Strategy

Our goal is to further capitalize on our position as the largest
global specialty retailer of nutritional supplements and the
trends affecting our industry, which specifically include
pursuing the following initiatives:



Increasing Store Productivity. We believe there is a
significant opportunity to improve the productivity of our
existing store base through new product introductions. We also
intend to utilize an enhanced point-of-sale system and customer
databases to better understand our customer needs and adjust our
merchandizing and product assortment by store.



Emphasis on Our Proprietary Products. We will continue to
emphasize our proprietary brands of nutritional products, which
typically have higher gross margins, by utilizing our integrated
development capabilities to formulate new value-added items and
featuring our proprietary brands through our in-store
merchandising. As part of this effort, we will continue to
develop proprietary products that are focused on specific health
concerns, such as joint support, blood pressure, and heart
health.



Marketing Initiatives. We will continue to encourage
customer loyalty, facilitate direct marketing, and increase
cross-selling and up-selling opportunities by using our
extensive customer base, Gold Card member database, and expanded
customer information that we are developing ourselves or in
cooperation with other retailers.



Expansion of International and Domestic Store Base. We
will continue to opportunistically open new stores both abroad
and in the United States. We are committed to expanding our
international store network by growing our international
franchise presence, which requires minimal capital expenditures
on our part. We expect on average to open approximately 100 new
international franchise locations each year over the next four
to five years. We also plan to open approximately
35 company-owned stores in the United States in 2006 in
order to expand our domestic presence.



Internet Sales. We launched our www.gnc.com website in
December 2005. Given our brand recognition, we believe there is
significant opportunity to grow our revenue in this channel,
particularly in regions where we do not have retail operations
or have limited operations. In addition, our website will be an
advertising medium as well as a resource for consumers to
educate themselves about the latest nutritional supplement
trends and new product introductions.



Partnership Opportunities. We are exploring initiatives
to partner with healthcare and wellness companies and other
third parties to develop programs to market our products to
employees for wellness and preventive healthcare purposes in an
effort to reduce overall healthcare costs.

Despite the competitive strengths described above, there are a
number of risks and uncertainties that may affect our financial
and operating performance and our ability to execute our
strategy, including unfavorable publicity or consumer perception
of our products and any similar products distributed by other
companies and our failure to appropriately respond to changing
consumer preferences and demand for new products and services.
In addition to these risks and uncertainties, you should also
consider the risks discussed under Risk Factors.

Corporate Information

Our principal executive office is located at 300 Sixth Avenue,
Pittsburgh, Pennsylvania 15222, and our telephone number is
(412) 288-4600. We
also maintain a website at www.gnc.com.

Underwriters option to
purchase additional shares from
the selling stockholders in this
offering

shares

Common stock outstanding after
this offering

shares

Voting rights

One vote per share

Use of proceeds

We estimate that the net proceeds to us from this offering will
be approximately
$ million,
after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us. We intend to use
our net proceeds to redeem all of our outstanding preferred
stock, including the liquidation preference, additional
redemption price, accumulated and unpaid dividends, and related
expenses. A
$ change
in the per share offering price would change net proceeds to us
by approximately
$ million.
Any remaining net proceeds will be used for working capital and
general corporate purposes. We will not receive any proceeds
from the sale of any shares by the selling stockholders. See
Use of Proceeds.

Proposed New York Stock Exchange symbol

GNC

Risk factors

For a discussion of risks relating to our business and an
investment in our common stock, see Risk Factors
beginning on page 12.

Except as otherwise indicated, the number of shares of our
common stock that will be outstanding after this offering is
based on the 29,621,538 shares outstanding as of
May 31, 2006, and:



includes the shares of common stock to be issued by us upon the
closing of this offering;



assumes an initial public offering price of
$ per
share, the midpoint of the range on the cover of this prospectus;



excludes 2,828,360 shares of common stock subject to
outstanding stock options with a weighted average exercise price
of $6.23 per share; and



excludes shares
of common stock available for future grant or issuance under our
stock plans.

Unless we specifically state otherwise, the information in this
prospectus:



gives effect to
a -for- split
of shares of our common stock to be effected before the
completion of this offering; and



does not take into account the sale of up
to shares
of our common stock that the underwriters have the option to
purchase from the selling stockholders.

The summary consolidated financial data presented below for the
period from January 1, 2003 to December 4, 2003, for
the 27 days ended December 31, 2003 and for the years
ended December 31, 2004 and 2005 are derived from our
audited consolidated financial statements and accompanying
footnotes included in this prospectus. The summary consolidated
financial data for the period from January 1, 2003 to
December 4, 2003 represent a period during which our
predecessor, General Nutrition Companies, Inc. was owned by
Numico USA, Inc. The summary consolidated financial data for the
27 days ended December 31, 2003, for the years ended
December 31, 2004 and 2005, and for the three months ended
March 31, 2005 and 2006 represent the period of operations
subsequent to the December 5, 2003 acquisition from Numico,
which we refer to as the Numico acquisition in this prospectus.

The summary consolidated financial data presented below for the
three months ended March 31, 2005 and 2006, and as of
March 31, 2006, are derived from our unaudited consolidated
financial statements and accompanying notes included in this
prospectus and include, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments,
for a fair statement of our financial position and operating
results as of and for the three months ended March 31, 2005
and 2006. Our results for interim periods are not necessarily
indicative of our results for a full years operations.

We define EBITDA as net income (loss) before interest expense
(net), income tax (benefit) expense, depreciation, and
amortization. Management uses EBITDA as a tool to measure
operating performance of the business. We use EBITDA as one
criterion for evaluating our performance relative to our
competitors and also as a measurement for the calculation of
management incentive compensation. Although we primarily view
EBITDA as an operating performance measure, we also consider it
to be a useful analytical tool for measuring our liquidity, our
leverage capacity, and our ability to service our debt and
generate cash for other purposes. We also use EBITDA to
determine our compliance with certain covenants in the senior
credit facility, and the indentures governing the senior notes
and senior subordinated notes, of our wholly owned subsidiary
and operating company, General Nutrition Centers, Inc., or
Centers. The reconciliation of EBITDA as presented below is
different than that used for purposes of the convenants under
the indentures governing the senior notes and senior
subordinated notes. Historically, we have highlighted our use of
EBITDA as a liquidity measure and for related purposes because
of our focus on the holders of Centers debt. At the same
time, however, management has also internally used EBITDA as a
performance measure. EBITDA is not a measurement of our
financial performance under GAAP and should not be considered as
an alternative to net income, operating income, or any other
performance measures derived in accordance with GAAP, or as an
alternative to GAAP cash flow from operating activities, as a
measure of our profitability or liquidity. Some of the
limitations of EBITDA are as follows:



EBITDA does not reflect interest expense or the cash requirement
necessary to service interest or principal payments on our debt;



although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA does not reflect any cash
requirements for such replacements; and



although EBITDA is frequently used by securities analysts,
lenders, and others in their evaluation of companies, our
calculation of EBITDA may differ from other similarly titled
measures of other companies, limiting its usefulness as a
comparative measure.

We compensate for these limitations by relying primarily on our
GAAP results and using EBITDA only supplementally. See our
consolidated financial statements included in this prospectus.

Adjusted EBITDA is presented as additional information, as
management also uses Adjusted EBITDA to evaluate the operating
performance of the business and as a measurement for the
calculation of management incentive compensation. Management
believes that Adjusted EBITDA is commonly used by security
analysts, lenders, and others. Adjusted EBITDA may not be
comparable to other similarly titled measures reported by other
companies, limiting its usefulness as a comparative measure.

The following table reconciles EBITDA and Adjusted EBITDA to net
(loss) income as determined in accordance with GAAP for the
periods indicated:

The management fee represents an annual payment of
$1.5 million to an affiliate of our principal stockholder
and will not be payable subsequent to this offering.

(b)

The discretionary payment to stock option holders was made in
conjunction with the $49.9 million restricted payments made
to our common stockholders in March 2006. It was recommended to
and approved by our board of directors. Our board of directors
decided to make the discretionary payment because it recognized
that the restricted payments decreased the value of equity
interest of option holders, who were not entitled to receive the
restricted payments based upon their options. See Dividend
Policy. Our board also wanted to recognize the option
holders for their contribution to GNC in 2005.

(2)

For the full year ended December 31, 2003, capital
expenditures were $32.8 million.

(3)

The following table summarizes our locations for the periods
indicated:

Predecessor

Period from

January 1,

27 Days

Three Months

Three Months

2003 to

Ended

Year Ended

Year Ended

Ended

Ended

December 4,

December 31,

December 31,

December 31,

March 31,

March 31,

2003

2003

2004

2005

2005

2006

Company-owned Stores

Beginning of period

2,898

2,757

2,748

2,642

2,642

2,650

Store openings(a)

80

4

82

137

32

40

Store closings

(221

)

(13

)

(188

)

(129

)

(30

)

(29

)

End of period

2,757

2,748

2,642

2,650

2,644

2,661

Franchised stores

Domestic

Beginning of period

1,352

1,352

1,355

1,290

1,290

1,156

Store openings

98

5

31

17

3

2

Store closings

(98

)

(2

)

(96

)

(151

)

(32

)

(35

)

End of period

1,352

1,355

1,290

1,156

1,261

1,123

International

Beginning of period

557

626

654

746

746

858

Store openings

88

28

115

132

34

48

Store closings

(19

)



(23

)

(20

)

(7

)

(33

)

End of period

626

654

746

858

773

873

Store-within-a-Store Locations

Beginning of period

900

988

988

1,027

1,027

1,149

Location openings

93



44

130

17

11

Location closings

(5

)



(5

)

(8

)

(1

)



End of period

988

988

1,027

1,149

1,043

1,160

Total locations

5,723

5,745

5,705

5,813

5,721

5,817

(a)

Includes re-acquired franchised stores.

(4)

Domestic company-owned same store sales growth excludes the net
sales of a store for any period if the store was not open during
the same period of the prior year. Beginning in 2006, we also
included our internet sales, as generated through www.gnc.com
and drugstore.com, in our same store sales calculation. When a
stores square footage has been changed as a result of
reconfiguration or relocation in the same mall, the store
continues to be treated as a same store. When a store closes

during the current period, sales from that store up to and
including the closing day are included as same store sales as
long as the store was open during the same days of the prior
period. Domestic company-owned same store sales were calculated
on a calendar basis for all periods presented.

(5)

Domestic franchised same store sales growth excludes the net
sales of a store for any period if the store was not open during
the same period of the prior year. When a stores square
footage has been changed as a result of reconfiguration or
relocation in the same mall, the store continues to be treated
as a same store. When a store closes during the current period,
sales from that store up to and including the closing day are
included as same store sales as long as the store was open
during the same days of the prior period. Domestic franchised
same store sales were calculated on a calendar basis for all
periods presented.

(6)

Adjusted to reflect (a) the sale by us
of shares
of our common stock offered hereby at an initial public offering
price of
$ per
share and the application of the estimated net proceeds to us
from this offering, after deducting estimated underwriting
discounts and commissions and estimated offering expenses
payable by us, and (b) the payment after completion of the
offering with cash on hand of a dividend totaling
$ million
to our common stockholders of record before the offering. See
Use of Proceeds, Dividend Policy, and
Capitalization.

Before deciding to invest in our common stock, you should
carefully consider each of the following risk factors and all of
the other information in this prospectus. The following risks
comprise all the material risks of which we are aware; however,
these risks and uncertainties may not be the only ones we face.
Additional risks and uncertainties not presently known to us or
that we currently believe are immaterial may also adversely
affect our business or financial performance. The following
risks could materially harm our business, financial condition,
future results, and cash flow. If that occurs, the trading price
of our common stock could decline, and you could lose all or
part of your investment.

The U.S. nutritional supplements retail industry is large
and highly fragmented. Participants include specialty retailers,
supermarkets, drugstores, mass merchants, multi-level marketing
organizations, on-line merchants, mail-order companies, and a
variety of other smaller participants. The market is also highly
sensitive to the introduction of new products, including various
prescription drugs, which may rapidly capture a significant
share of the market. In the United States, we also compete for
sales with heavily advertised national brands manufactured by
large pharmaceutical and food companies, as well as other
retailers. In addition, as some products become more mainstream,
we experience increased competition for those products as more
participants enter the market. For example, when the trend in
favor of low-carbohydrate products developed, we experienced
increased competition for our diet products from supermarkets,
drug stores, mass merchants, and other food companies, which
adversely affected sales of our diet products. Our international
competitors include large international pharmacy chains, major
international supermarket chains, and other large
U.S.-based companies
with international operations. Our wholesale and manufacturing
operations compete with other wholesalers and manufacturers of
third-party nutritional supplements. We may not be able to
compete effectively and our attempt to do so may require us to
reduce our prices, which may result in lower margins. Failure to
effectively compete could adversely affect our market share,
revenues, and growth prospects.

Unfavorable publicity or consumer perception of our
products and any similar products distributed by other companies
could cause fluctuations in our operating results and could have
a material adverse effect on our reputation, the demand for our
products, and our ability to generate revenues.

We are highly dependent upon consumer perception of the safety
and quality of our products, as well as similar products
distributed by other companies. Consumer perception of products
can be significantly influenced by scientific research or
findings, national media attention, and other publicity about
product use. A product may be received favorably, resulting in
high sales associated with that product that may not be
sustainable as consumer preferences change. Future scientific
research or publicity could be unfavorable to our industry or
any of our particular products and may not be consistent with
earlier favorable research or publicity. A future research
report or publicity that is perceived by our consumers as less
favorable or that questions earlier research or publicity could
have a material adverse effect on our ability to generate
revenues. For example, sales of some of our VMHS products, such
as St. Johns Wort, Sam-e, and Melatonin, and more recently
sales of Vitamin E, were initially strong, but decreased
substantially as a result of negative publicity. As a result of
the above factors, our operations may fluctuate significantly
from quarter to quarter, which may impair our ability to make
payments when due on our debt.
Period-to-period
comparisons of our results should not be relied upon as a
measure of our future performance. Adverse publicity in the form
of published scientific research or otherwise, whether or not
accurate, that associates consumption of our products or any
other similar products with illness or other adverse effects,
that questions the benefits of our or similar products, or that
claims that such products are ineffective could have a material
adverse effect on our reputation, the demand for our products,
and our ability to generate revenues.

Our failure to appropriately respond to changing consumer
preferences and demand for new products could significantly harm
our customer relationships and product sales.

Our business is particularly subject to changing consumer trends
and preferences, especially with respect to our diet products.
For example, the recent trend in favor of low-carbohydrate diets
was not as dependent on diet products as many other dietary
programs, which caused and may continue to cause a significant
reduction in sales in our diet category. Our continued success
depends in part on our ability to anticipate and respond to
these changes, and we may not be able to respond in a timely or
commercially appropriate manner to these changes. If we are
unable to do so, our customer relationships and product sales
could be harmed significantly.

Furthermore, the nutritional supplement industry is
characterized by rapid and frequent changes in demand for
products and new product introductions. Our failure to
accurately predict these trends could negatively impact consumer
opinion of our stores as a source for the latest products. This
could harm our customer relationships and cause losses to our
market share. The success of our new product offerings depends
upon a number of factors, including our ability to:



accurately anticipate customer needs;



innovate and develop new products;



successfully commercialize new products in a timely manner;



price our products competitively;



manufacture and deliver our products in sufficient volumes and
in a timely manner; and



differentiate our product offerings from those of our
competitors.

If we do not introduce new products or make enhancements to meet
the changing needs of our customers in a timely manner, some of
our products could become obsolete, which could have a material
adverse effect on our revenues and operating results.

Changes in our management team could affect our business
strategy and adversely impact our performance and results of
operations.

In the last two years, we have experienced several management
changes. In December 2004, our then Chief Executive Officer
resigned. In 2005, five of our then key officers resigned,
including our former Chief Executive Officer, who served in that
position for approximately five months. In November 2005, our
board of directors appointed Joseph Fortunato, then our Chief
Operating Officer, as our Chief Executive Officer. Effective
April 17, 2006, our Chief Operating Officer resigned,
although he continues to serve as Merchandising Counselor, and
we appointed a new Chief Merchandising Officer. Effective
April 28, 2006, the new Chief Merchandising Officer
resigned. These and other changes in management could result in
changes to, or impact the execution of, our business strategy.
Any such changes could be significant and could have a negative
impact on our performance and results of operations. In
addition, if we are unable to successfully transition members of
management into their new positions, management resources could
be constrained.

Compliance with new and existing governmental regulations
could increase our costs significantly and adversely affect our
results of operations.

The processing, formulation, manufacturing, packaging, labeling,
advertising, and distribution of our products are subject to
federal laws and regulation by one or more federal agencies,
including the Food and Drug Administration, or FDA, the Federal
Trade Commission, or FTC, the Consumer Product Safety
Commission, the United States Department of Agriculture, and the
Environmental Protection Agency. These activities are also
regulated by various state, local, and international laws and
agencies of the states and localities in which our products are
sold. Government regulations may prevent or delay the
introduction, or require the reformulation, of our products,
which could result in lost revenues and

increased costs to us. For instance, the FDA regulates, among
other things, the composition, safety, labeling, and marketing
of dietary supplements (including vitamins, minerals, herbs, and
other dietary ingredients for human use). The FDA may not accept
the evidence of safety for any new dietary ingredient that we
may wish to market, may determine that a particular dietary
supplement or ingredient presents an unacceptable health risk,
and may determine that a particular claim or statement of
nutritional support that we use to support the marketing of a
dietary supplement is an impermissible drug claim or an
unauthorized version of a health claim. See
Business  Government Regulations 
Product Regulation. Any of these actions could prevent us
from marketing particular dietary supplement products or making
certain claims or statements of nutritional support for them.
The FDA could also require us to remove a particular product
from the market. For example, in April 2004, the FDA banned the
sale of products containing ephedra. Sale of products containing
ephedra amounted to approximately $35.2 million, or 3.3%,
of our retail sales in 2003 and approximately
$182.9 million, or 17.1%, of our retail sales in 2002. Any
future recall or removal would result in additional costs to us,
including lost revenues from any additional products that we are
required to remove from the market, any of which could be
material. Any product recalls or removals could also lead to
liability, substantial costs, and reduced growth prospects.

Additional or more stringent regulations of dietary supplements
and other products have been considered from time to time. These
developments could require reformulation of some products to
meet new standards, recalls or discontinuance of some products
not able to be reformulated, additional record-keeping
requirements, increased documentation of the properties of some
products, additional or different labeling, additional
scientific substantiation, adverse event reporting, or other new
requirements. Any of these developments could increase our costs
significantly. For example, legislation has been introduced in
Congress to impose substantial new regulatory requirements for
dietary supplements including adverse event reporting and other
requirements. Key members of Congress and the dietary supplement
industry have indicated that they have reached an agreement to
support legislation requiring adverse event reporting. If
enacted, new legislation could raise our costs and negatively
impact our business. In addition, we expect that the FDA will
soon adopt the proposed rules on Good Manufacturing Practice in
manufacturing, packaging, or holding dietary ingredients and
dietary supplements, which will apply to the products we
manufacture. We may not be able to comply with the new rules
without incurring additional expenses, which could be
significant. See Business  Government
Regulation  Product Regulation for additional
information.

Our failure to comply with FTC regulations and existing
consent decrees imposed on us by the FTC could result in
substantial monetary penalties and could adversely affect our
operating results.

The FTC exercises jurisdiction over the advertising of dietary
supplements and has instituted numerous enforcement actions
against dietary supplement companies, including us, for failure
to have adequate substantiation for claims made in advertising
or for the use of false or misleading advertising claims. As a
result of these enforcement actions, we are currently subject to
three consent decrees that limit our ability to make certain
claims with respect to our products and required us to pay civil
penalties. See Business  Government
Regulation  Product Regulation. Failure by us
or our franchisees to comply with the consent decrees and
applicable regulations could occur from time to time. Violations
of these orders could result in substantial monetary penalties,
which could have a material adverse effect on our financial
condition or results of operations.

Because we rely on our manufacturing operations to produce
nearly all of the proprietary products we sell, disruptions in
our manufacturing system or losses of manufacturing
certifications could adversely affect our sales and customer
relationships.

Our manufacturing operations produced approximately 33% of the
products we sold for the first quarter of 2006 and approximately
35% for 2005. Other than powders and liquids, nearly all of our
proprietary products are produced in our manufacturing facility
located in Greenville, South Carolina. As of March 31,
2006, no one vendor supplied more than 10% of our raw materials.
In the event any of our third-party suppliers or vendors were to
become unable or unwilling to continue to provide raw materials
in

the required volumes and quality levels or in a timely manner,
we would be required to identify and obtain acceptable
replacement supply sources. If we are unable to obtain
alternative supply sources, our business could be adversely
affected. Any significant disruption in our operations at our
Greenville, South Carolina facility for any reason, including
regulatory requirements and loss of certifications, power
interruptions, fires, hurricanes, war, or other force majeure,
could disrupt our supply of products, adversely affecting our
sales and customer relationships.

If we fail to protect our brand name, competitors may
adopt trade names that dilute the value of our brand
name.

We have invested significant resources to promote our GNC brand
name in order to obtain the public recognition that we have
today. However, we may be unable or unwilling to strictly
enforce our trademark in each jurisdiction in which we do
business. In addition, because of the differences in foreign
trademark laws concerning proprietary rights, our trademark may
not receive the same degree of protection in foreign countries
as it does in the United States. Also, we may not always be able
to successfully enforce our trademark against competitors or
against challenges by others. For example, a third party is
currently challenging our right to register in the United States
certain marks that incorporate our GNC Live Well
trademark. Our failure to successfully protect our trademark
could diminish the value and effectiveness of our past and
future marketing efforts and could cause customer confusion.
This could in turn adversely affect our revenues and
profitability.

Intellectual property litigation and infringement claims
against us could cause us to incur significant expenses or
prevent us from manufacturing, selling, or using some aspect of
our products, which could adversely affect our revenues and
market share.

We may be subject to intellectual property litigation and
infringement claims, which could cause us to incur significant
expenses or prevent us from manufacturing, selling, or using
some aspect of our products. Claims of intellectual property
infringement also may require us to enter into costly royalty or
license agreements. However, we may be unable to obtain royalty
or license agreements on terms acceptable to us or at all.
Claims that our technology or products infringe on intellectual
property rights could be costly and would divert the attention
of management and key personnel, which in turn could adversely
affect our revenues and profitability.

A substantial amount of our revenues are generated from
our franchisees, and our revenues could decrease significantly
if our franchisees do not conduct their operations profitably or
if we fail to attract new franchisees.

As of March 31, 2006 approximately 34%, and as of
December 31, 2005 approximately 35%, of our retail
locations were operated by franchisees. Our franchise operations
generated approximately 16% of our revenues for the first
quarter of 2006 and for 2005. Our revenues from franchised
stores depend on the franchisees ability to operate their
stores profitably and adhere to our franchise standards. The
closing of unprofitable franchised stores or the failure of
franchisees to comply with our policies could adversely affect
our reputation and could reduce the amount of our franchise
revenues. These factors could have a material adverse effect on
our revenues and operating income.

If we are unable to attract new franchisees or to convince
existing franchisees to open additional stores, any growth in
royalties from franchised stores will depend solely upon
increases in revenues at existing franchised stores, which could
be minimal. In addition, our ability to open additional
franchised locations is limited by the territorial restrictions
in our existing franchise agreements as well as our ability to
identify additional markets in the United States and other
countries that are not currently saturated with the products we
offer. If we are unable to open additional franchised locations,
we will have to sustain additional growth internally by
attracting new and repeat customers to our existing locations.

Economic, political, and other risks associated with our
international operations could adversely affect our revenues and
international growth prospects.

As of March 31, 2006, we had 873 international franchised
stores in 45 international markets. We derived 7.9% of our
revenues for the first quarter of 2006 and 8.2% of our revenues
for 2005 from our international operations. As part of our
business strategy, we intend to expand our international
franchise presence. Our international operations are subject to
a number of risks inherent to operating in foreign countries,
and any expansion of our international operations will increase
the effects of these risks. These risks include, among others:

As a franchisor, we are subject to federal, state, and
international laws regulating the offer and sale of franchises.
These laws impose registration and extensive disclosure
requirements on the offer and sale of franchises and frequently
apply substantive standards to the relationship between
franchisor and franchisee and limit the ability of a franchisor
to terminate or refuse to renew a franchise. We may, therefore,
be required to retain an under-performing franchise and may be
unable to replace the franchisee, which could adversely impact
franchise revenues. In addition, we cannot predict the nature
and effect of any future legislation or regulation on our
franchise operations.

As a retailer, distributor, and manufacturer of products
designed for human consumption, we are subject to product
liability claims if the use of our products is alleged to have
resulted in injury. Our products consist of vitamins, minerals,
herbs, and other ingredients that are classified as foods or
dietary supplements and are not subject to pre-market regulatory
approval in the United States. Our products could contain
contaminated substances, and some of our products contain
ingredients that do not have long histories of human
consumption. Previously unknown adverse reactions resulting from
human consumption of these ingredients could occur. In addition,
third-party manufacturers produce many of the products we sell.
As a distributor of products manufactured by third parties, we
may also be liable for various product liability claims for
products we do not manufacture. We have been and may be subject
to various product liability claims, including, among others,
that our products include inadequate instructions for use or
inadequate warnings concerning possible side effects and
interactions with other substances. For example, as of
March 31, 2006, we have been named as a defendant in 227
pending cases involving the sale of

products that contain ephedra. See Business 
Legal Proceedings. Any product liability claim against us
could result in increased costs and could adversely affect our
reputation with our customers, which in turn could adversely
affect our revenues and operating income. All claims to date
have been tendered to the third-party manufacturer or to our
insurer, and we have incurred no expense to date with respect to
litigation involving ephedra products. Furthermore, we are
entitled to indemnification by Numico for losses arising from
claims related to products containing ephedra sold before
December 5, 2003. All of the pending cases relate to
products sold before that time.

We are not insured for a significant portion of our claims
exposure, which could materially and adversely affect our
operating income and profitability.

We have procured insurance independently for the following
areas: (1) general liability; (2) product liability;
(3) directors and officers liability; (4) property
insurance; (5) workers compensation insurance; and
(6) various other areas. We are self-insured for other
areas, including: (1) medical benefits;
(2) workers compensation coverage in New York, with a
stop loss of $250,000; (3) physical damage to our tractors,
trailers, and fleet vehicles for field personnel use; and
(4) physical damages that may occur at company-owned
stores. We are not insured for some property and casualty risks
due to the frequency and severity of a loss, the cost of
insurance, and the overall risk analysis. In addition, we carry
product liability insurance coverage that requires us to pay
deductibles/retentions with primary and excess liability
coverage above the deductible/retention amount. Because of our
deductibles and self-insured retention amounts, we have
significant exposure to fluctuations in the number and severity
of claims. We currently maintain product liability insurance
with a retention of $1.0 million per claim with an
aggregate cap on retained loss of $10.0 million. As a
result, our insurance and claims expense could increase in the
future. Alternatively, we could raise our
deductibles/retentions, which would increase our already
significant exposure to expense from claims. If any claim
exceeds our coverage, we would bear the excess expense, in
addition to our other self-insured amounts. If the frequency or
severity of claims or our expenses increase, our operating
income and profitability could be materially adversely affected.
See Business  Legal Proceedings.

As of March 31, 2006, our total debt was approximately
$472.8 million, and we had an additional $65.1 million
available for borrowing on a secured basis under our
$75.0 million senior revolving credit facility after giving
effect to the use of $9.9 million of the revolving credit
facility to secure letters of credit. All of the debt under our
senior credit facility bears interest at variable rates. We are
subject to additional interest expense if these rates increase
significantly, which could also reduce our ability to borrow
additional funds.

Our substantial debt could have important consequences on our
financial condition. For example, it could:



require us to use all or a large portion of our cash to pay
principal and interest on our debt, which could reduce the
availability of our cash to fund working capital, capital
expenditures, and other business activities;



increase our vulnerability to general adverse economic and
industry conditions;



limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate;



restrict us from making strategic acquisitions or exploiting
business opportunities;



make it more difficult for us to satisfy our obligations with
respect to our debt;

We require a significant amount of cash to service our
debt. Our ability to generate cash depends on many factors
beyond our control and, as a result, we may not be able to make
payments on our debt obligations.

We may be unable to generate sufficient cash flow from
operations, to realize anticipated cost savings and operating
improvements on schedule or at all, or to obtain future
borrowings under our credit facilities or otherwise in an amount
sufficient to enable us to pay our debt or to fund our other
liquidity needs. In addition, because we conduct our operations
through our operating subsidiaries, we depend on those entities
for dividends and other payments to generate the funds necessary
to meet our financial obligations, including payments on our
debt. Under certain circumstances, legal and contractual
restrictions, as well as the financial condition and operating
requirements of our subsidiaries, may limit our ability to
obtain cash from our subsidiaries. If we do not have sufficient
liquidity, we may need to refinance or restructure all or a
portion of our debt on or before maturity, sell assets, or
borrow more money. We may not be able to do so on terms
satisfactory to us or at all.

If we are unable to meet our obligations with respect to our
debt, we could be forced to restructure or refinance our debt,
seek equity financing, or sell assets. If we are unable to
restructure, refinance, or sell assets in a timely manner or on
terms satisfactory to us, we may default under our obligations.
As of March 31, 2006, substantially all of our debt was
subject to acceleration clauses. A default on any of our debt
obligations could trigger these acceleration clauses and cause
those and our other obligations to become immediately due and
payable. Upon an acceleration of any of our debt, we may not be
able to make payments under our debt.

Changes in our results of operation or financial condition
and other events may adversely affect our ability to comply with
financial covenants in our senior credit facility or other debt
covenants.

We are required by our senior credit facility to maintain
certain financial ratios, including, but not limited to, fixed
charge coverage and maximum total leverage ratios. Our ability
to comply with these covenants and other provisions of the
senior credit facility, the indentures governing Centers
existing senior notes and senior subordinated notes, or similar
covenants in future debt financings may be affected by changes
in our operating and financial performance, changes in general
business and economic conditions, adverse regulatory
developments, or other events beyond our control. The breach of
any of these covenants could result in a default under our debt,
which could cause those and other obligations to become
immediately due and payable. If any of our debt is accelerated,
we may not be able to repay it.

Despite our and our subsidiaries current significant
level of debt, we may still be able to incur more debt, which
would increase the risks described above.

We and our subsidiaries may be able to incur substantial
additional debt in the future, including secured debt. Although
our senior credit facility and the indentures governing
Centers existing senior notes and senior subordinated
notes contain restrictions on the incurrence of additional debt,
these restrictions are subject to a number of qualifications and
exceptions, and under certain circumstances, debt incurred in
compliance with these restrictions could be substantial. If
additional debt is added to our current level of debt, the
substantial risks described above would increase.

Our principal stockholder may take actions that conflict
with your interests. This control may have the effect of
delaying or preventing changes of control or changes in
management or limiting the ability of other stockholders to
approve transactions they deem to be in their best
interest.

Immediately following this
offering, % of our common stock,
or % if the underwriters exercise
their overallotment option in full, will be held by GNC
Investors, LLC, our principal stockholder. In our
stockholders agreement, each of our current stockholders,
including our principal stockholder, has irrevocably appointed
Apollo Investment Fund V, L.P., an affiliate of our
principal stockholder, as its proxy and
attorney-in-fact to
vote all of the shares of common stock held by the stockholder
at any time for all matters subject to the vote of the
stockholder in the manner determined by Apollo Investment
Fund V in its sole and absolute discretion, whether at any
meeting of the stockholders or by written consent or otherwise.
The proxy remains in effect for so long as Apollo Investment
Fund V, together with related co-investment entities (which
we refer to along with Apollo Investment Fund V as Apollo
Funds V), which include our principal stockholder in
certain circumstances, own at least 2,100,000 shares of our
common stock. Accordingly, upon completion of this offering and
giving effect to the use of proceeds from the offering, Apollo
Investment Fund V will have the right to vote shares
representing %
of our common stock,
or %
if the underwriters exercise their overallotment option in full.
In addition, so long as Apollo Funds V own at least
2,100,000 shares of our common stock, and subject to the
rights of the holders of our preferred stock, Apollo Investment
Fund V has the right to nominate all of the members of our
board of directors, and each of our current stockholders has
agreed to vote all shares of common stock held by the
stockholder to ensure the election of the directors nominated by
Apollo Investment Fund V. As a result, Apollo Investment
Fund V will continue to be able to exercise control over
all matters requiring stockholder approval, including the
election of directors, amendment of our certificate of
incorporation, and approval of significant corporate
transactions, and it will have significant control over our
management and policies. This control may have the effect of
delaying or preventing changes in control or changes in
management, or limiting the ability of our other stockholders to
approve transactions that they may deem to be in their best
interest. See Description of Capital Stock 
Stockholders Agreement.

We will be a controlled company within the
meaning of the New York Stock Exchange rules and, as a result,
will qualify for, and intend to rely on, exemptions from certain
corporate governance requirements that provide protection to
stockholders of other companies.

After the completion of this offering, GNC Investors, LLC will
own more than 50% of our outstanding common stock, and Apollo
Investment Fund V will hold more than 50% of the total
voting power of our common stock, and, therefore, we will be a
controlled company under the NYSE corporate
governance standards. As a controlled company, we intend to
utilize certain exemptions under the NYSE standards that free us
from the obligation to comply with certain NYSE corporate
governance requirements, including the requirements:



that a majority of our board of directors consists of
independent directors;



that we have a nominating and corporate governance committee
that is composed entirely of independent directors with a
written charter addressing the committees purpose and
responsibilities;



that we have a compensation committee that is composed entirely
of independent directors; and



that we conduct an annual performance evaluation of the
nominating and governance committee and the compensation
committee.

As a result of our use of the controlled company exemptions, you
will not have the same protection afforded to stockholders of
companies that are subject to all of the NYSE corporate
governance requirements. See Management  Board
Composition for more information.

The price of our common stock may fluctuate substantially,
and you could lose all or part of your investment.

The initial public offering price for the shares of our common
stock sold in this offering will be determined by negotiation
between the representatives of the underwriters, Apollo
Management V, L.P., and us. This price may not reflect the
market price of our common stock following this offering. In
addition, the market price of our common stock is likely to be
highly volatile and may fluctuate substantially due to many
factors, including:



actual or anticipated fluctuations in our results of operations;



variance in our financial performance from the expectations of
market analysts;



conditions and trends in the markets we serve;



announcements of significant new products by us or our
competitors;



changes in our pricing policies or the pricing policies of our
competitors;



legislation or regulatory policies, practices, or actions;



the commencement or outcome of litigation;



our sale of common stock or other securities in the future, or
sales of our common stock by our principal stockholder;



changes in market valuation or earnings of our competitors;



the trading volume of our common stock;



changes in the estimation of the future size and growth rate of
our markets; and



general economic conditions.

In addition, the stock market in general, the New York Stock
Exchange, and the market for health and nutritional supplements
companies in particular have experienced extreme price and
volume fluctuations that have often been unrelated or
disproportionate to the operating performance of the particular
companies affected. If any of these factors causes us to fail to
meet the expectations of securities analysts or investors, or if
adverse conditions prevail or are perceived to prevail with
respect to our business, the price of our common stock would
likely drop significantly.

We currently do not intend to pay dividends on our common
stock after the offering. Consequently, your only opportunity to
achieve a return on your investment is if the price of our
common stock appreciates.

We currently do not plan to declare dividends on shares of our
common stock after the offering and for the foreseeable future.
Further, Centers is currently restricted from declaring or
paying cash dividends to us pursuant to the terms of its senior
credit facility, its senior subordinated notes, and its senior
notes, which effectively restricts us from declaring or paying
any cash dividends. Centers has already used exceptions to these
restrictions to make payments totaling $49.9 million to our
common stockholders in March 2006. We also plan to declare a
dividend totaling
$ million
to our common stockholders of record immediately before the
offering, which will be payable by us with cash on hand after
completion of the offering. See Dividend Policy for
more information. Consequently, your only opportunity to achieve
a return on your investment in our company will be if the market
price of our common stock appreciates and you sell your shares
at a profit. There is no guarantee that the price of our common
stock that will prevail in the market after this offering will
ever exceed the price that you pay.

Future sales of our common stock may depress our share
price.

After this offering, we will
have shares
of common stock outstanding.
The shares
sold in this offering,
or shares
if the underwriters overallotment option is exercised in
full, will be freely tradable without restriction or further
registration under federal securities laws unless purchased

by our affiliates. The remaining shares of common stock
outstanding after this offering will be available for sale in
the public market as follows:

Number of Shares

Date of Availability for Sale

On the date of this prospectus

180 days after the date of this prospectus, although all
but shares
will be subject to certain volume limitations under
Rule 144 of the Securities Act

The above table assumes the effectiveness of the
lock-up agreements
under which our executive officers, directors, and our principal
stockholder have agreed not to sell or otherwise dispose of
their shares of common stock and that we or the representatives
of the underwriters have not waived the market stand-off
provisions applicable to holders of options to purchase our
common stock. Holders of options to
purchase shares
of our common stock have entered into stock option agreements
with us pursuant to which they have agreed not to sell or
otherwise dispose of shares of common stock underlying these
options for a period of 180 days after the date of this
prospectus without the prior written consent of GNC or the
underwriters subject to exceptions and possible extension as
described in Underwriting.

Merrill Lynch, Lehman Brothers Inc., and UBS Securities LLC may,
in their discretion and at any time without notice, release all
or any portion of the securities subject to the
lock-up agreements or
the market stand-off provisions in our stock option agreements.

Sales of substantial amounts of our common stock in the public
market following this offering, or the perception that these
sales may occur, could cause the market price of our common
stock to decline. After the
lock-up agreements
pertaining to this offering expire, additional stockholders,
including our principal stockholder, will be able to sell their
shares in the public market, subject to legal restrictions on
transfer. As soon as practicable upon completion of this
offering, we also intend to file registration statements
covering shares of our common stock issued or reserved for
issuance under our stock plans. In addition, under our
stockholders agreement, some of our stockholders are
entitled to registration rights. Subject to the terms of the
lock-up agreements,
registration of the sale of these shares of our common stock
would generally permit their sale into the market immediately
after registration. These registration rights of our
stockholders could impair our ability to raise capital by
depressing the price of our common stock. We may also sell
additional shares of common stock in subsequent public
offerings, which may adversely affect market prices for our
common stock. See Shares Eligible for Future Sale
for more information.

As a new investor, you will experience substantial
dilution in the net tangible book value of your shares.

The initial public offering price of our common stock will be
considerably more than the net tangible book value per share of
our outstanding common stock. Accordingly, investors purchasing
shares of common stock in this offering will:



pay a price per share that substantially exceeds the value of
our assets after subtracting liabilities; and



contribute % of the total amount
invested to fund our company, but will own
only % of the shares of common
stock outstanding after this offering and the use of proceeds
from the offering.

To the extent outstanding stock options are exercised, there
will be further dilution to new investors. See
Dilution for more information.

Certain provisions of our corporate governing documents
and Delaware law could discourage, delay, or prevent a merger or
acquisition at a premium price.

Certain provisions of our organizational documents and Delaware
law could discourage potential acquisition proposals, delay or
prevent a change in control of our company, or limit the price
that investors may be willing to pay in the future for shares of
our common stock. For example, our certificate of

incorporation and by-laws will, upon completion of this
offering, permit us to issue, without any further vote or action
by the stockholders, up to 150,000,000 shares of preferred
stock in one or more series and, with respect to each series, to
fix the number of shares constituting the series and the
designation of the series, the voting powers (if any) of the
shares of the series, and the preferences and relative,
participating, optional, and other special rights, if any, and
any qualifications, limitations, or restrictions of the shares
of the series. In addition, our certificate of incorporation
permits our board of directors to adopt amendments to our
by-laws. See Description of Capital Stock 
Provisions of Our Amended and Restated Certificate of
Incorporation and Amended and Restated By-laws and Delaware Law
that May Have an Anti-Takeover Effect.

Our holding company structure makes us dependent on our
subsidiaries for our cash flow and subordinates the rights of
our stockholders to the rights of creditors of our subsidiaries
in the event of an insolvency or liquidation of any of our
subsidiaries.

We are a holding company and, accordingly, substantially all of
our operations are conducted through our subsidiaries. Our
subsidiaries are separate and distinct legal entities. As a
result, our cash flow depends upon the earnings of our
subsidiaries. In addition, we depend on the distribution of
earnings, loans, or other payments by our subsidiaries to us.
Our subsidiaries have no obligation to provide us with funds for
our payment obligations. If there is an insolvency, liquidation,
or other reorganization of any of our subsidiaries, our
stockholders will have no right to proceed against their assets.
Creditors of those subsidiaries will be entitled to payment in
full from the sale or other disposal of the assets of those
subsidiaries before we, as a stockholder, would be entitled to
receive any distribution from that sale or disposal.

This prospectus includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
with respect to our financial condition, results of operations,
and business that is not historical information. Forward-looking
statements include statements that may relate to our plans,
objectives, goals, strategies, future events, future revenues or
performance, capital expenditures, financing needs, and other
information that is not historical information. Many of these
statements appear, in particular, under the headings
Prospectus Summary, Risk Factors,
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and
Business. Forward-looking statements can be
identified by the use of terminology such as subject
to, believe, anticipate,
plan, expect, intend,
estimate, project, may,
will, should, can, the
negatives thereof, variations thereon, and similar expressions,
or by discussions of strategy.

All forward-looking statements, including, without limitation,
our examination of historical operating trends, are based upon
our current expectations and various assumptions. We believe
there is a reasonable basis for our expectations and beliefs,
but they are inherently uncertain. We may not realize our
expectations, and our beliefs may not prove correct. Actual
results could differ materially from those described or implied
by such forward-looking statements. Factors that may materially
affect such forward-looking statements include, among others:



significant competition in our industry;



unfavorable publicity or consumer perception of our products;



the incurrence of material product liability and product recall
costs;



costs of compliance and our failure to comply with governmental
regulations;



the failure of our franchisees to conduct their operations
profitably and limitations on our ability to terminate or
replace under-performing franchisees;



economic, political, and other risks associated with our
international operations;



our failure to keep pace with the demands of our customers for
new products and services;



disruptions in our manufacturing system or losses of
manufacturing certifications;



the lack of long-term experience with human consumption of
ingredients in some of our products;



increases in the frequency and severity of insurance claims,
particularly claims for which we are self-insured;



loss or retirement of key members of management;



increases in the cost of borrowings and limitations on
availability of additional debt or equity capital;



the impact of our substantial debt on our operating income and
our ability to grow; and



the failure to adequately protect or enforce our intellectual
property rights against competitors.

Consequently, forward-looking statements should be regarded
solely as our current plans, estimates, and beliefs. You should
not place undue reliance on forward-looking statements. We
cannot guarantee future results, events, levels of activity,
performance, or achievements. We do not undertake and
specifically decline any obligation to update, republish, or
revise forward-looking statements to reflect future events or
circumstances or to reflect the occurrences of unanticipated
events.

We estimate that our net proceeds from this offering will be
approximately
$ million,
based on an assumed initial public offering price of
$ per
share and after deducting estimated underwriting discounts and
commissions and estimated offering expenses. We will not receive
any proceeds from the sale of the shares being offered by the
selling stockholders.

We intend to use our net proceeds to redeem all
$100.0 million in liquidation preference of our outstanding
Series A preferred stock at a redemption price per share of
$1,085.71, plus accumulated dividends not paid in cash through
the redemption date and related expenses. Any of our remaining
net proceeds will be used for working capital and general
corporate purposes.

We issued the Series A preferred stock in December 2003.
The holders of the Series A preferred stock are entitled to
receive dividends at a rate per year equal to 12% of the
liquidation preference of $1,000 per share plus accumulated
dividends. Dividends on the Series A preferred stock are
payable quarterly, but we have elected not to pay dividends in
cash, and, as of June 1, 2006, the accumulated dividends
for each share totaled $342.18.

To the extent that the underwriters exercise their option to
purchase additional shares of common stock to cover
overallotments from the selling stockholders, we will not
receive any proceeds from the exercise of this option.

DIVIDEND POLICY

We currently do not anticipate paying any cash dividends after
the offering and for the foreseeable future. Instead, we
anticipate that all of our earnings on our common stock, in the
foreseeable future will be used to repay debt, for working
capital, to support our operations, and to finance the growth
and development of our business. Any future determination
relating to dividend policy will be made at the discretion of
our board of directors and will depend on a number of factors,
including restrictions in our debt instruments, our future
earnings, capital requirements, financial condition, future
prospects, and applicable Delaware law, which provides that
dividends are only payable out of surplus or current net profits.

Centers is currently restricted from declaring or paying cash
dividends to us pursuant to the terms of its senior credit
facility, its senior subordinated notes, and its senior notes,
which restricts our ability to declare or pay any cash
dividends. Centers has already used exceptions to these
restrictions to make permitted restricted payments totaling
$49.9 million to our common stockholders in March 2006.
These payments were determined to be in compliance with
Centers debt covenants and the terms of our Series A
preferred stock. We also plan to declare a dividend totaling
$ million
to our common stockholders of record before the offering. The
dividend declaration will be expressly conditioned upon the
redemption of our outstanding Series A preferred stock. See
Use of Proceeds. The dividend will be payable as a
permitted restricted payment with cash on hand after completion
of the offering.

The following table sets forth our capitalization as of
March 31, 2006 on:



an actual basis; and



an as adjusted basis, giving effect to (1) the completion
of this offering, including the application of the estimated net
proceeds from this offering described under Use of
Proceeds, and (2) the payment after the offering to
our common stockholders of record before the offering of a
dividend totaling
$ million.

The table below should be read in conjunction with Use of
Proceeds, Selected Consolidated Financial
Data, Managements Discussion and Analysis of
Financial Condition and Results of Operations,
Description of Capital Stock, Description of
Certain Debt, and our consolidated financial statements
and their notes included in this prospectus.

We plan to declare a dividend totaling
$ million
to our common stockholders of record immediately before the
offering, which will be paid with cash on hand after completion
of the offering.

(2)

The senior credit facility consists of a $75.0 million
revolving credit facility and a $95.9 million term loan
facility. As of March 31, 2006, no amounts had been drawn
on the revolving credit facility. Total availability under the
revolving credit facility was $65.1 million, after giving
effect to $9.9 million of outstanding letters of credit.

(3)

We intend to use our net proceeds from the offering to redeem
all of our outstanding preferred stock.

At March 31, 2006, the net tangible book value of our
common stock was approximately
$ million,
or approximately
$ per
share of our common stock. After giving effect to (1) the
sale of shares of our common stock in this offering at an
assumed initial public offering price of
$ per
share, and after deducting estimated underwriting discounts and
commissions and the estimated offering expenses of this
offering, and (2) the payment after the offering to our
common stockholders of record before the offering of a dividend
totaling
$ million,
the as adjusted net tangible book value at March 31, 2006
attributable to common stockholders would have been
approximately
$ million,
or approximately
$ per
share of our common stock. This represents a net increase in net
tangible book value of
$ per
existing share and an immediate dilution in net tangible book
value of
$ per
share to new stockholders. The following table illustrates this
per share dilution to new stockholders:

Assumed initial public offering price per share

$

Net tangible book value per share as of March 31, 2006

$

Increase per share attributable to this offering

$

As adjusted net tangible book value per share after this offering

$

Dilution per share to new stockholders

$

The table below summarizes, as of March 31, 2006, the
differences for (1) our existing stockholders, and
(2) investors in this offering, with respect to the number
of shares of common stock purchased from us, the total
consideration paid, and the average price per share paid before
deducting fees and expenses.

Shares Issued

Total Consideration

Average

Price per

Number

Percentage

Amount

Percentage

Share

Existing stockholders

%

%

New stockholders in this offering

%

%

Total

The foregoing discussion and tables assumes no exercise of stock
options to purchase 2,828,360 shares of our common stock
subject to outstanding stock options with a weighted average
exercise price of $6.23 per share as of March 31, 2006
and
exclude shares
of our common stock available for future grant or issuance under
our stock plans. To the extent that any options having an
exercise price that is less than the offering price of this
offering are exercised, new investors will experience further
dilution.

The selected consolidated financial data presented below as of
and for the years ended December 31, 2001 and 2002 are
derived from our audited consolidated financial statements and
their notes not included in this prospectus. The selected
consolidated financial data presented below for the period ended
December 4, 2003, the 27 days ended December 31,
2003, and the years ended December 31, 2004 and 2005 are
derived from our audited consolidated financial statements and
their notes included in this prospectus. The selected
consolidated financial data as of and for the years ended
December 31, 2001 and 2002 and the period from January 1,
2003 to December 4, 2003 represent the periods during which
General Nutrition Companies, Inc. was owned by Numico.

On December 5, 2003, Centers, our wholly owned subsidiary,
acquired 100% of the outstanding equity interests of General
Nutrition Companies, Inc. from Numico in a business combination
accounted for under the purchase method of accounting. As a
result, the financial data presented for 2003 include a
predecessor period from January 1, 2003 through
December 4, 2003 and a successor period from
December 5, 2003 through December 31, 2003. The
selected consolidated financial data presented below for
(1) the period from January 1, 2003 to
December 4, 2003 and as of December 4, 2003 and
(2) the 27 days ended December 31, 2003 and as of
December 31, 2003 are derived from our audited consolidated
financial statements and their notes included in this
prospectus. The selected consolidated financial data for the
period from January 1, 2003 to December 4, 2003
represent the period in 2003 that General Nutrition Companies,
Inc. was owned by Numico. The selected consolidated financial
data for the 27 days ended December 31, 2003 represent
the period of operations in 2003 after the Numico acquisition.

As a result of the Numico acquisition, the consolidated
statements of operations for the successor periods include the
following: interest and amortization expense resulting from the
senior credit facility and issuance of the senior subordinated
notes and the senior notes; amortization of intangible assets
related to the Numico acquisition; and management fees that did
not exist prior to the Numico acquisition. Further, as a result
of purchase accounting, the fair values of our assets on the
date of the Numico acquisition became their new cost basis.
Results of operations for the successor periods are affected by
the new cost basis of these assets.

The selected consolidated financial data presented below as of
March 31, 2006 and for the three months ended
March 31, 2005 and March 31, 2006 are derived from our
unaudited consolidated financial statements and their notes
included in this prospectus, and the consolidated financial data
as of March 31, 2005 is derived from our unaudited
consolidated financial statements and their notes not included
in this prospectus, and include, in the opinion of management,
all adjustments necessary for a fair statement of our financial
position and operating results for those periods and as of those
dates. Our results for interim periods are not necessarily
indicative of our results for a full years operations.

You should read the following financial information together
with the information under Managements Discussion
and Analysis of Financial Condition and Results of
Operations and our consolidated financial statements and
their related notes.

Other (income) expense includes foreign currency
(gain) loss for all of the periods presented. Other
(income) expense for the year ended December 31, 2005 and
the three months ended March 31, 2005 included
$2.5 million transaction fee income related to the transfer
of our GNC Australian franchise rights to an existing
franchisee. Other (income) expense for the year ended
December 31, 2004, included a $1.3 million charge for
costs related to the preparation of a registration statement for
an offering of our common stock to the public. As that offering
was not completed, these costs were expensed. Other (income)
expense for the years ended December 31, 2001 and 2002, and
the period ended December 4, 2003 includes
$3.6 million, $214.4 million, and $7.2 million,
respectively, received from legal settlement proceeds that we
collected from a raw material pricing settlement.

(2)

On January 1, 2002, we adopted SFAS No. 142,
which requires that goodwill and other intangible assets with
indefinite lives no longer be subject to amortization, but
instead are to be tested at least annually for impairment. For
the periods ended December 31, 2002 and December 4,
2003, we recognized impairment charges of $222.0 million
(pre-tax) and $709.4 million (pre-tax), respectively, for
goodwill and other intangibles as a result of decreases in
expectations regarding growth and profitability; additionally in
2003, the impairment resulted from increased competition from
the mass market, negative publicity by the media on certain
supplements, and increasing pressure from the FDA on the
industry as a whole, each of which were identified in connection
with a valuation related to the Numico acquisition.

(3)

Upon adoption of SFAS No. 142, we recorded a one-time
impairment charge in the first quarter of 2002 of
$889.7 million, net of tax, to reduce the carrying amount
of goodwill and other intangibles to their implied fair value.

(4)

We have reflected the weighted average common shares outstanding
of our predecessor to be the number of shares outstanding of our
successor for the comparable period. The actual weighted average

common shares outstanding for our predecessor for the periods
ended December 31, 2001, 2002, and December 4, 2003
was 1,000 shares.

(5)

Working capital represents current assets less current
liabilities.

(6)

We define EBITDA as net income (loss) before interest expense
(net), income tax (benefit) expense, depreciation, and
amortization. Management uses EBITDA as a tool to measure
operating performance of our business. We use EBITDA as one
criterion for evaluating our performance relative to our
competitors and also as a measurement for the calculation of
management incentive compensation. Although we primarily view
EBITDA as an operating performance measure, we also consider it
to be a useful analytical tool for measuring our liquidity, our
leverage capacity, and our ability to service our debt and
generate cash for other purposes. We also use EBITDA to
determine our compliance with certain covenants in Centers
senior credit facility and indentures governing the senior notes
and senior subordinated notes. The reconciliation of EBITDA as
presented below is different than that used for purposes of the
covenants under the indentures governing the senior notes and
senior subordinated notes. Historically, we have highlighted our
use of EBITDA as a liquidity measure and for related purposes,
because of our focus on the holders of Centers debt. At
the same time, however, management has also internally used
EBITDA as a performance measure. EBITDA is not a measurement of
our financial performance under GAAP and should not be
considered as an alternative to net income, operating income, or
any other performance measures derived in accordance with GAAP,
or as an alternative to GAAP cash flow from operating
activities, as a measure of our profitability or liquidity. Some
of the limitations of EBITDA are as follows:



EBITDA does not reflect interest expense or the cash requirement
necessary to service interest or principal payments on our debt;



although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA does not reflect any cash
requirements for such replacements; and



although EBITDA is frequently used by securities analysts,
lenders, and others in their evaluation of companies, our
calculation of EBITDA may differ from other similarly titled
measures of other companies, limiting its usefulness as a
comparative measure.

We compensate for these limitations by relying primarily on our
GAAP results and using EBITDA only supplementally. See our
consolidated financial statements included in this prospectus.
The following table reconciles EBITDA to net (loss) income as
determined in accordance with GAAP for the periods indicated:

Predecessor

Period from

Year Ended

Year Ended

January 1, 2003 to

27 Days Ended

Year Ended

Year Ended

Three Months Ended

Three Months Ended

December 31, 2001

December 31, 2002

December 4, 2003

December 31, 2003

December 31, 2004

December 31, 2005

March 31, 2005

March 31, 2006

(Unaudited)

(Dollars in millions)

Net (loss) income

$

(55.9

)

$

(960.9

)

$

(584.9

)

$

0.4

$

41.7

$

18.4

$

2.7

$

11.4

Interest expense, net

140.0

136.3

121.1

2.8

34.5

43.1

13.5

9.7

Income tax (benefit) expense

(14.1

)

1.0

(174.5

)

0.2

24.5

10.7

1.6

6.8

Depreciation and amortization

122.0

58.1

59.1

2.3

38.8

41.0

10.1

9.6

EBITDA(a)

$

192.0

$

(765.5

)

$

(579.2

)

$

5.7

$

139.5

$

113.2

$

27.9

$

37.5

(a)

For each of the years ended December 31, 2004 and 2005,
EBITDA included an annual management fee paid to Apollo
Management V of $1.5 million, which will not be
payable subsequent to this offering. For the three months ended
March 31, 2006, EBITDA included (i) a
$4.8 million discretionary payment to our stock option
holders, which was made in conjunction with the restricted
payments made to our common stockholders in March 2006, and was
recommended to and approved by our board of directors, and
(ii) a management fee paid to Apollo Management V of
$0.4 million.

(7)

Capital expenditures for 2002 included approximately
$13.9 million incurred in connection with our store reset
and upgrade program. For the full year ended December 31,
2003, capital expenditures were $32.8 million.

The following table summarizes our locations for the periods
indicated:

Predecessor

Period from

January 1, 2003 to

27 Days Ended

Year Ended

Year Ended

Three Months Ended

Three Months Ended

2001

2002

December 4, 2003

December 31, 2003

December 31, 2004

December 31, 2005

March 31, 2005

March 31, 2006

(Unaudited)

Company-owned Stores

Beginning of period

2,842

2,960

2,898

2,757

2,748

2,642

2,642

2,650

Store openings(a)

220

117

80

4

82

137

32

40

Store closings

(102

)

(179

)

(221

)

(13

)

(188

)

(129

)

(30

)

(29

)

End of period

2,960

2,898

2,757

2,748

2,642

2,650

2,644

2,661

Franchised Stores

Domestic

Beginning of period

1,396

1,364

1,352

1,352

1,355

1,290

1,290

1,156

Store openings

137

82

98

5

31

17

3

2

Store closings

(169

)

(94

)

(98

)

(2

)

(96

)

(151

)

(32

)

(35

)

End of period

1,364

1,352

1,352

1,355

1,290

1,156

1,261

1,123

International

Beginning of period

322

457

557

626

654

746

746

858

Store openings

154

100

88

28

115

132

34

48

Store closings

(19

)



(19

)



(23

)

(20

)

(7

)

(33

)

End of period

457

557

626

654

746

858

773

873

Store-within-a-Store Locations

Beginning of period

544

780

900

988

988

1,027

1,027

1,149

Location openings

237

131

93



44

130

17

11

Location closings

(1

)

(11

)

(5

)



(5

)

(8

)

(1

)



End of period

780

900

988

988

1,027

1,149

1,043

1,160

Total locations

5,561

5,707

5,723

5,745

5,705

5,813

5,721

5,817

(a)

Includes re-acquired franchised stores.

(9)

Domestic company-owned same store sales growth excludes the net
sales of a store for any period if the store was not open during
the same period of the prior year. Beginning in 2006, we also
included our internet sales, as generated through www.gnc.com
and drugstore.com, in our same store sales calculation. When a
stores square footage has been changed as a result of
reconfiguration or relocation in the same mall, the store
continues to be treated as a same store. When a store closes
during the current period, sales from that store up to and
including the closing day are included as same store sales as
long as the store was open during the same days of the prior
period. Domestic company-owned same store sales were calculated
on a calendar basis for all periods presented.

(10)

Domestic franchised same store sales growth excludes the net
sales of a store for any period if the store was not open during
the same period of the prior year. When a stores square
footage has been changed as a result of reconfiguration or
relocation in the same mall, the store continues to be treated
as a same store. When a store closes during the current period,
sales from that store up to and including the closing day are
included as same store sales as long as the store was open
during the same days of the prior period. Domestic franchised
same store sales were calculated on a calendar basis for all
periods presented.

You should read the following discussion in conjunction with
Selected Consolidated Financial Data and our
consolidated financial statements and related notes included in
this prospectus. The discussion in this section contains
forward-looking statements that involve risks and uncertainties.
See Risk Factors included in this prospectus for a
discussion of important factors that could cause actual results
to differ materially from those described or implied by the
forward-looking statements contained herein. Please refer to
Special Note Regarding Forward-Looking
Statements included in this prospectus.

On December 5, 2003, Centers acquired 100% of the
outstanding equity interests of General Nutrition Companies,
Inc. from Numico for an aggregate purchase price of
$747.4 million, consisting of $733.2 million in cash
and the assumption of $14.2 million of mortgage debt. We
subsequently received $15.7 million and paid
$5.9 million to Numico related to working capital
contingent purchase price adjustments. The results of operations
and cash flows reflect our predecessor entity, on a carve-out
basis, for the period from January 1, 2003 to
December 4, 2003. See  Basis of
Presentation.

Business Overview

We are the largest global specialty retailer of nutritional
supplements, which include VMHS, sports nutrition products, diet
products, and other wellness products. We derive our revenues
principally from product sales through our company-owned stores
and www.gnc.com, franchise activities, and sales of products
manufactured in our facilities to third parties. We sell
products through a worldwide network of more than 5,800
locations operating under the GNC brand name.

Revenues from Business Segments

Revenues are derived from our three business segments, Retail,
Franchise, and Manufacturing/ Wholesale, primarily as follows:



Retail revenues are generated by sales to consumers at our
company-owned stores and through www.gnc.com. Although we
believe that our retail and franchise businesses are not
seasonal in nature, historically we have experienced, and expect
to continue to experience, a substantial variation in our net
sales and operating results from quarter to quarter, with the
first half of the year being stronger than the second half of
the year.



Franchise revenues are generated primarily from:

(1)

product sales to our franchisees;

(2)

royalties on franchise retail sales; and

(3)

franchise fees, which are charged for initial franchise awards,
renewals, and transfers of franchises.



Manufacturing/ Wholesale revenues are generated through sales of
manufactured products to third parties, generally for
third-party private label brands, and the sale of our
proprietary and third-party products to and through Rite Aid and
drugstore.com.

Executive Overview

In 2005, we undertook a series of strategic initiatives to
rebuild the business and to establish a foundation for stronger
future performance. In the first quarter of 2006, we continued
to focus on these strategies and continued to see favorable
results. These initiatives have allowed us to capitalize on our
national footprint, brand awareness, and competitive positioning
to improve our overall performance. Specifically, we:



introduced a single national pricing structure in order to
simplify our pricing approach and improve our customer value
perception;

revitalized vendor relationships, including their new product
development activities and our exclusive or first-to-market
access to new products;



realigned our franchise system with our corporate strategies and
re-acquired or closed unprofitable or non-compliant franchised
stores in order to improve the financial performance of the
franchise system;



reduced our overhead cost structure; and



launched internet sales of our products on www.gnc.com.

These and other strategies implemented in 2005 led to a reverse
of the negative trends of the business. Domestic same store
sales improved with each successive quarter of the year,
culminating with an 8.1% increase in company-owned stores in the
fourth quarter of 2005. In the first quarter of 2006, domestic
same store sales, increased 14.5%. We also realized steady
improvement in our product categories, highlighted by particular
strength in the sports nutrition and VMHS categories. During the
latter part of 2005 we began to see a stabilizing diet category
and, in the first quarter of 2006, we saw substantial
improvement in the category compared to 2005.

Basis of Presentation

Purchase Accounting

We accounted for the Numico acquisition under the purchase
method of accounting. As a result, the financial data presented
for 2003 include a predecessor period from January 1, 2003
through December 4, 2003 and a successor period for the
27 days ended December 31, 2003. As a result of the
Numico acquisition, the consolidated statements of operations
for the successor periods include: interest and amortization
expense resulting from Centers credit facility and the
issuance of Centers senior notes and senior subordinated
notes; amortization of intangible assets related to the Numico
acquisition; and management fees that did not exist prior to the
Numico acquisition. Further, as a result of purchase accounting,
the fair values of our assets on the date of the Numico
acquisition became their new cost basis. Results of operations
for the successor periods are affected by the new cost basis of
these assets. We allocated the Numico acquisition consideration
to the tangible and intangible assets acquired and liabilities
assumed by us based upon their respective fair values as of the
date of the Numico acquisition, which resulted in a significant
change in our annual depreciation and amortization expenses.

The financial statements for the periods prior to the Numico
acquisition are labeled as Predecessor and the
periods subsequent to the Numico acquisition are labeled as
Successor.

Successor. Our financial statements for the 27 days
ended December 31, 2003, for the years ended
December 31, 2004 and 2005, and the three months ended
March 31, 2005 and 2006 include the accounts of GNC and our
wholly owned subsidiaries. Included in this period are fair
value adjustments to assets and liabilities, including
inventory, goodwill, other intangible assets, and property,
plant and equipment. Also included is the corresponding effect
these adjustments had to cost of sales, depreciation, and
amortization expenses.

Predecessor. For the period from January 1, 2003 to
December 4, 2003, the consolidated financial statements of
General Nutrition Companies, Inc. were prepared on a carve-out
basis and reflect the consolidated financial position, results
of operations, and cash flows in accordance with GAAP. The
financial statements for this period reflected amounts that were
pushed down from Nutricia and Numico in order to depict the
financial position, results of operations, and cash flows of
General Nutrition Companies, Inc. based on these carve-out
principles. In conjunction with the sale of General Nutrition
Companies, Inc. to Centers, all related-party term debt was
settled in full. As a result of recording these amounts, the
financial statements of General Nutrition Companies, Inc. for
the period from January 1, 2003 to December 4, 2003
may not be indicative of the results that would be presented if
General Nutrition Companies, Inc. had operated as an
independent, stand-alone entity.

Related Parties

In the years ended December 31, 2005 and 2004, GNC had
related party transactions with Apollo Management V and its
affiliates. General Nutrition Companies, Inc. had related party
transactions with Numico and other affiliates during the period
January 1, 2003 to December 4, 2003. For further
discussion of these transactions, see Certain
Relationships and Related Transactions and the
Related Party Transactions note to our consolidated
financial statements included in this prospectus.

Results of Operations

The information presented below for the three months ended
March 31, 2006 and 2005 was derived from our unaudited
consolidated financial statements and accompanying notes. The
information presented below for the years ended
December 31, 2005 and 2004, the 27 days ended
December 31, 2003, and the period January 1, 2003 to
December 4, 2003, was derived from our audited consolidated
financial statements and accompanying notes. In the table below
and in the accompanying discussion, the 27 days ended
December 31, 2003 and the period January 1, 2003 to
December 4, 2003 have been combined for discussion purposes.

As discussed in the Segment note to our consolidated
financial statements, we evaluate segment operating results
based on several indicators. The primary key performance
indicators are revenues and operating income or loss for each
segment. Revenues and operating income or loss, as evaluated by
management, exclude certain items that are managed at the
consolidated level, such as warehousing and transportation
costs, impairments, and other corporate costs. The following
discussion compares the revenues and the operating income or
loss by segment, as well as those items excluded from the
segment totals.

We calculate our same store sales growth to exclude the net
sales of a store for any period if the store was not open during
the same period of the prior year. Beginning in 2006, we also
include our internet sales, as generated through www.gnc.com and
drugstore.com, in our same store sales calculation. When a
stores square footage has been changed as a result of
reconfiguration or relocation in the same mall, the store
continues to be treated as a same store. Company-owned and
domestic franchised same store sales have been calculated on a
calendar basis for all periods presented.

(Dollars in millions and percentages expressed as a percentage of total net revenues)

Revenues:

Retail

$

993.3

74.1

%

$

66.2

74.1

%

$

1,059.5

74.1

%

$

1,001.8

74.5

%

$

989.4

75.1

%

$

255.2

75.9

%

$

294.9

76.2

%

Franchise

241.3

18.0

%

14.2

15.9

%

255.5

17.9

%

226.5

16.8

%

212.8

16.1

%

52.6

15.6

%

60.3

15.6

%

Manufacturing/Wholesale

105.6

7.9

%

8.9

10.0

%

114.5

8.0

%

116.4

8.7

%

115.5

8.8

%

28.6

8.5

%

31.7

8.2

%

Total net revenues

1,340.2

100.0

%

89.3

100.0

%

1,429.5

100.0

%

1,344.7

100.0

%

1,317.7

100.0

%

336.4

100.0

%

386.9

100.0

%

Operating expenses:

Cost of sales, including costs of warehousing, distribution and
occupancy

934.9

69.7

%

63.6

71.2

%

998.5

69.9

%

895.2

66.5

%

898.7

68.2

%

230.4

68.5

%

256.9

66.4

%

Compensation and related benefits

235.0

17.5

%

16.7

18.7

%

251.7

17.6

%

230.0

17.1

%

228.6

17.3

%

57.3

17.0

%

65.9

17.0

%

Advertising and promotion

38.4

2.9

%

0.5

0.6

%

38.9

2.7

%

44.0

3.3

%

44.7

3.4

%

14.6

4.3

%

15.8

4.1

%

Other selling, general and administrative expenses

64.1

4.8

%

4.8

5.4

%

68.9

4.8

%

69.8

5.2

%

72.6

5.5

%

17.9

5.3

%

20.0

5.2

%

Amortization expense

6.8

0.5

%

0.3

0.3

%

7.1

0.5

%

4.0

0.3

%

4.0

0.3

%

1.0

0.3

%

1.0

0.3

%

Income from legal settlement

(7.2

)

(0.5

)%





(7.2

)

(0.5

)%

















Foreign currency gain

(2.9

)

(0.2

)%





(2.9

)

(0.2

)%

(0.3

)

0.0

%

(0.6

)

0.0

%

(0.1

)

0.0

%

(0.6

)

(0.2

)%

Impairment of goodwill and intangible assets

709.4

52.9

%





709.4

49.6

%

















Other expense (income)













1.3

0.1

%

(2.5

)

(0.2

)%

(2.5

)

(0.7

)%





Total operating expenses

1,978.5

147.6

%

85.9

96.2

%

2,064.4

144.4

%

1,244.0

92.5

%

1,245.5

94.5

%

318.6

94.7

%

359.0

92.8

%

Operating (loss) income:

Retail

79.1

5.9

%

6.6

7.3

%

85.7

6.0

%

107.7

8.0

%

77.2

5.9

%

17.9

5.3

%

35.3

9.1

%

Franchise

63.7

4.8

%

2.4

2.7

%

66.1

4.6

%

62.4

4.6

%

52.0

3.9

%

10.8

3.2

%

16.1

4.2

%

Manufacturing/ Wholesale

24.3

1.8

%

1.4

1.6

%

25.7

1.8

%

38.6

2.9

%

46.0

3.5

%

12.1

3.6

%

11.2

2.9

%

Unallocated corporate and other (costs) income:

Warehousing and distribution costs

(40.7

)

(3.0

)%

(3.4

)

(3.8

)%

(44.1

)

(3.1

)%

(49.3

)

(3.7

)%

(50.0

)

(3.8

)%

(12.7

)

(3.7

)%

(12.8

)

(3.3

)%

Corporate costs

(62.5

)

(4.7

)%

(3.6

)

(4.0

)%

(66.1

)

(4.6

)%

(57.4

)

(4.2

)%

(55.5

)

(4.2

)%

(12.8

)

(3.8

)%

(21.9

)

(5.7

)%

Income from legal settlement

7.2

0.5

%





7.2

0.5

%

















Impairment of goodwill and intangible assets

(709.4

)

(52.9

)%





(709.4

)

(49.6

)%

















Other (expense) income













(1.3

)

(0.1

)%

2.5

0.2

%

2.5

0.7

%





Subtotal unallocated corporate and other costs, net

(805.4

)

(60.1

)%

(7.0

)

(7.8

)%

(812.4

)

(56.8

)%

(108.0

)

(8.0

)%

(103.0

)

(7.8

)%

(23.0

)

(6.8

)%

(34.7

)

(9.0

)%

Total operating (loss) income

(638.3

)

(47.6

)%

3.4

3.8

%

(634.9

)

(44.4

)%

100.7

7.5

%

72.2

5.5

%

17.8

5.3

%

27.9

7.2

%

Interest expense, net

121.1

2.8

123.9

34.5

43.1

13.5

9.7

(Loss) income before income taxes

(759.4

)

0.6

(758.8

)

66.2

29.1

4.3

18.2

Income tax (benefit) expense

(174.5

)

0.2

(174.3

)

24.5

10.7

1.6

6.8

Net (loss) income

(584.9

)

0.4

(584.5

)

41.7

18.4

$

2.7

$

11.4

Other comprehensive income (loss)

1.6

0.3

1.9

0.9

0.1

(0.2

)

(0.6

)

Comprehensive (loss) income

$

(583.3

)

$

0.7

$

(582.6

)

$

42.6

$

18.5

$

2.5

$

10.8

Note: The numbers in the above table have been rounded to
millions. All calculations related to the Results of Operations
for the period-to-period comparisons below were derived from the
table above and could occasionally differ immaterially if you
were to use the unrounded data for these calculations.

Our consolidated net revenues increased $50.5 million, or
15.0%, to $386.9 million for the three months ended
March 31, 2006 compared to $336.4 million for the same
period in 2005. The increase was primarily the result of
increased comparable same store sales in our Retail and
Franchise segments and increased revenue in our Manufacturing/
Wholesale segment due to a higher demand from our third-party
customers for certain soft-gelatin products.

Retail. Revenues in our Retail segment increased
$39.7 million, or 15.6%, to $294.9 million for the
three months ended March 31, 2006 compared to
$255.2 million for the same period in 2005. Included as
part of the revenue increase was $3.8 million in revenue
for sales through www.gnc.com, which started selling products on
December 28, 2005. Sales increases occurred in all major
product categories, including VMHS, sports nutrition, and diet.
Our domestic company-owned comparable same store sales,
including our internet sales, improved for the quarter by 14.5%.
Corporate store sales reflect the benefit of an extra day
compared with the first quarter of 2005 due to the Easter
holiday occurring in March of 2005. This effect added 0.6% to
the corporate comparable same store growth.

Similar to the sales trends in our domestic company-owned
stores, our Canadian company-owned stores had improved
comparable same store sales of 16.6% in the first quarter of
2006. Our company-owned store base increased by 20 stores to
2,529 domestically, and our Canadian store base declined by
three stores to 132 at March 31, 2006 compared to
March 31, 2005.

Franchise. Revenues in our Franchise segment increased
$7.7 million, or 14.6%, to $60.3 million for the three
months ended March 31, 2006 compared to $52.6 million
for the same period in 2005. This improvement in revenue
resulted primarily from increased wholesale product sales to the
domestic franchisees of $6.8 million and $0.8 million
to the international franchisees, and an increase in other
revenue of $0.1 million. Our domestic franchised stores
recognized improved retail sales for the three months ended
March 31, 2006, as evidenced by an increase in comparable
same store sales for these stores of 7.3%. Franchised store
sales reflect the benefit of an extra day compared with the
first quarter of 2005 due to the Easter holiday occurring in
March in 2005. This effect added 0.6% to the franchise
comparable same store growth. Our domestic franchised store base
declined by 138 stores to 1,123 at March 31, 2006, from
1,261 at March 31, 2005, primarily as the result of our
acquisition of 101 franchised stores in 2005 and 27 franchised
stores in the first quarter of 2006. Our international
franchised store base increased by 100 stores to 873 at
March 31, 2006 compared to 773 at March 31, 2005.

Manufacturing/ Wholesale. Revenues in our Manufacturing/
Wholesale segment, which includes third-party sales from our
manufacturing facilities in South Carolina and Australia, as
well as wholesale sales to Rite Aid and drugstore.com, increased
$3.1 million or 10.8%, to $31.7 million for the three
months ended March 31, 2006 compared to $28.6 million
for the same period in 2005. This increase occurred primarily in
the Greenville, South Carolina plant, which had an increase of
$2.3 million, principally as a result of increased sales of
soft-gelatin products. We also had an increase of
$1.1 million in sales to Rite Aid. These increases were
partially offset by decreased sales to drugstore.com of
$0.3 million.

Cost of Sales

Consolidated cost of sales, which includes product costs, costs
of warehousing and distribution, and occupancy costs, increased
$26.5 million, or 11.5%, to $256.9 million for the
three months ended March 31, 2006 compared to
$230.4 million for the same period in 2005. Consolidated
cost of sales, as a percentage of net revenue, were 66.4% for
the three months ended March 31, 2006 compared to 68.5% for
the first quarter of 2005.

Product costs. Product costs increased
$24.4 million, or 14.4%, to $194.1 million for the
three months ended March 31, 2006 compared to
$169.7 million for the same period in 2005. This increase
was primarily due to increased sales volumes at our retail
stores. Consolidated product costs, as a percentage of net
revenue, were 50.2% for the three months ended March 31,
2006 compared to 50.4% for the first

quarter of 2005. This improvement was due primarily to increased
volume in our Retail segment, which carries a higher margin than
the Franchise and Manufacturing/ Wholesale segments.

Warehousing and distribution costs. Warehousing and
distribution costs increased $0.3 million, or 2.3%, to
$13.3 million for the three months ended March 31,
2006 compared to $13.0 million for the same period in 2005.
This increase was primarily a result of increased fuel costs
that affected our private fleet, as well as the cost of outside
carriers, offset by cost savings in wages, benefits, and other
warehousing costs. Consolidated warehousing and distribution
costs, as a percentage of net revenue, were 3.4% for the three
months ended March 31, 2006 compared to 3.9% for the first
quarter of 2005.

Occupancy costs. Occupancy costs increased
$1.8 million, or 3.8%, to $49.5 million for the three
months ended March 31, 2006 compared to $47.7 million
for the same period in 2005. This increase was the result of
higher lease-related costs of $1.8 million. Consolidated
occupancy costs, as a percentage of net revenue, were 12.8% for
the three months ended March 31, 2006 compared to 14.2% for
the first quarter of 2005.

Selling, General and Administrative Expenses

Our consolidated SG&A expenses, which include compensation
and related benefits, advertising and promotion expense, other
selling, general and administrative expenses, and amortization
expense, increased $11.9 million, or 13.1%, to
$102.7 million, for the three months ended March 31,
2006 compared to $90.8 million for the same period in 2005.
These expenses, as a percentage of net revenue, were 26.6% for
the three months ended March 31, 2006 compared to 27.0% for
the first quarter of 2005.

Compensation and related benefits. Compensation and
related benefits increased $8.6 million, or 15.0%, to
$65.9 million for the three months ended March 31,
2006 compared to $57.3 million for the same period in 2005.
The increase was the result of increases in: (1) incentives
and commission expense of $7.3 million, a portion of which
related to a discretionary payment to employee stock option
holders of $4.2 million and accruals for incentive payments
of $2.7 million; (2) base wage expense, primarily in
our retail stores for part-time wages to support the increased
sales volumes, of $1.1 million; and (3) non-cash
compensation expense of $0.6 million. These increases were
partially offset by decreased severance costs of
$0.5 million.

Advertising and promotion. Advertising and promotion
expenses increased $1.2 million, or 8.2%, to
$15.8 million for the three months ended March 31,
2006 compared to $14.6 million during the same period in
2005. Advertising expense increased as a result of an increase
in print and television advertising of $1.8 million, offset
by decreases in other advertising-related expenses of
$0.6 million.

Other SG&A. Other SG&A expenses, including
amortization expense, increased $2.1 million, or 11.1%, to
$21.0 million for the three months ended March 31,
2006 compared to $18.9 million for the same period in 2005.
This increase was due to the following: (1) increases in
professional expenses of $1.9 million, a portion of which
related to a discretionary payment made to our non-employee
option holders of $0.6 million; (2) increases in
fulfillment fee expense on our internet sales through
www.gnc.com of $1.0 million; (3) an increase in credit
card fees of $0.6 million; and (4) an increase in
other SG&A expenses of $0.3 million. These were
partially offset by a $1.8 million decrease in bad debt
expense.

Foreign Currency Gain

We recognized a consolidated foreign currency gain of
$0.6 million in the three months ended March 31, 2006
compared to a gain of $0.1 million for the same period in
2005. These gains resulted primarily from accounts payable
activity with our Canadian subsidiary.

Other Income and Expense

Other income for the three months ended March 31, 2005
includes a transaction fee of $2.5 million, which was the
recognition of transaction fee income related to the transfer of
our Australian franchise rights.

As a result of the foregoing, consolidated operating income
increased $10.1 million, or 56.7%, to $27.9 million
for the three months ended March 31, 2006 compared to
$17.8 million for the same period in 2005. Operating
income, as a percentage of net revenue, was 7.2% for the three
months ended March 31, 2006 compared to 5.3% for the first
quarter of 2005.

Retail. Operating income increased $17.4 million, or
97.2%, to $35.3 million for the three months ended
March 31, 2006 compared to $17.9 million for the same
period in 2005. The primary reason for the increase was
increased sales and margin in all of our product categories.

Franchise. Operating income increased $5.3 million,
or 49.1%, to $16.1 million for the three months ended
March 31, 2006 compared to $10.8 million for the same
period in 2005. This increase was primarily attributable to an
increase in wholesale sales to our franchisees, despite a
reduced number of operating franchisees domestically, and a
reduction in bad debt expense.

Manufacturing/ Wholesale. Operating income decreased
$0.9 million, or 7.4%, to $11.2 million for the three
months ended March 31, 2006 compared to $12.1 million
for the same period in 2005. This decrease was primarily the
result of a decrease in favorable manufacturing variances at our
South Carolina facility when compared with the prior year, as
production at the plant was at a high point in the prior year.
Currently production at our South Carolina facility is now more
evenly allocated throughout the year.

Warehousing and distribution costs. Unallocated
warehousing and distribution costs increased $0.1 million,
or 0.8%, to $12.8 million for the three months ended
March 31, 2006 compared to $12.7 million for the same
period in 2005. This increase was primarily a result of
increased fuel costs, offset by reduced wages and other
operating expenses in our distribution centers.

Corporate costs. Corporate overhead cost increased
$9.1 million, or 71.1%, to $21.9 million for the three
months ended March 31, 2006 compared to $12.8 million
for the same period in 2005. This increase was primarily the
result of the discretionary payment made to stock option holders
in 2006, increases in incentive accrual expense, and increased
other professional fees.

Other. Other income for the three months ended
March 31, 2005 was $2.5 million, which was the
recognition of transaction fee income related to the transfer of
our Australian franchise rights.

Interest Expense

Interest expense decreased $3.8 million, or 28.1%, to
$9.7 million for the three months ended March 31, 2006
compared to $13.5 million for the same period in 2005. This
decrease was primarily attributable to the write-off of
$3.9 million of deferred financing fees in the first
quarter of 2005 resulting from the early extinguishment of debt.

Income Tax Expense

We recognized $6.8 million of consolidated income tax
expense during the three months ended March 31, 2006
compared to $1.6 million for the same period of 2005. The
increased tax expense for the three months ended March 31,
2006 was the result of an increase in income before income taxes
of $13.9 million. The effective tax rate for the three
months ended March 31, 2006 was 37.1% compared to 36.1% for
the same period in 2005. The increase in the effective tax rate
was primarily related to changes in the amounts of various
permanent differences.

Net Income

As a result of the foregoing, consolidated net income increased
$8.7 million, or 317.9%, to $11.4 million for the
three months ended March 31, 2006 compared to
$2.7 million for the same period in 2005. Net income, as a
percentage of net revenue, was 2.9% for the three months ended
March 31, 2006 compared to 0.8% for the first quarter of
2005.

Our consolidated net revenues decreased $27.0 million, or
2.0%, to $1,317.7 million for the year ended
December 31, 2005 compared to $1,344.7 million for the
same period in 2004. The decrease was primarily the result of
decreased comparable same store sales in our Retail and
Franchise segments, a reduced domestic franchised store base and
decreased revenue in our manufacturing segment due to declining
demand for Vitamin E soft-gel products.

Retail. Revenues in our Retail segment decreased
$12.4 million, or 1.2%, to $989.4 million for the year
ended December 31, 2005 compared to $1,001.8 million
for the same period in 2004. The revenue decrease occurred
primarily in our diet category and was partially offset by
increases in our sports nutrition and VMHS categories. The diet
category experienced sales declines each quarter in 2005, with
the first three quarters showing significant declines as a
result of reduced demand for low-carb products. The fourth
quarter diet sales, while remaining less than 2004, improved as
a result of new product introductions. Our domestic
company-owned comparable store sales improved each successive
quarter during 2005, from a decline of 7.8% in the first quarter
to an increase of 8.1% in the fourth quarter. For the total year
2005, our comparable store sales declined 1.5%. Our Canadian
company-owned stores had similar trends in sales as our domestic
company-owned stores, declining 11.0% in the first half of 2005
and increasing 0.3% in the second half of 2005. Our
company-owned store base increased by 10 stores to 2,517
domestically, and declined by two stores to 133 in Canada at
December 31, 2005.

Franchise. Revenues in our Franchise segment decreased
$13.7 million, or 6.0%, to $212.8 million for the year
ended December 31, 2005 compared to $226.5 million for
the same period in 2004. Our domestic franchised stores
recognized lower retail sales for the year ended
December 31, 2005, as evidenced by a decline in 2005
comparable same store sales for these stores of 4.8%. This
decline in retail sales resulted in decreased wholesale product
sales to the franchisees of $11.0 million and a decrease in
franchise royalty revenue of $1.1 million. Additionally,
other franchise revenue decreased by $1.6 million. Our
domestic franchised store base declined by 134 stores to 1,156
stores at December 31, 2005, from 1,290 stores at
December 31, 2004, primarily as the result of our
acquisition of 101 franchised stores in 2005. Our international
franchised store base increased by 112 stores to 858 stores at
December 31, 2005 compared to 746 stores at
December 31, 2004. Our international franchisees pay a
lower royalty rate and purchase fewer products from us than
domestic franchisees.

Manufacturing/ Wholesale. Revenues in our Manufacturing/
Wholesale segment, which includes third-party sales from our
manufacturing facilities in South Carolina and Australia, as
well as wholesale sales to Rite Aid and drugstore.com, decreased
$0.9 million, or 0.8%, to $115.5 million for the year
ended December 31, 2005 compared to $116.4 million for
the same period in 2004. This decrease occurred primarily in the
Greenville, South Carolina plant, which had a decrease of
$4.7 million as a result of declining demand for Vitamin E
soft-gel products from third-party customers and a decrease in
third-party sales at our Australian manufacturing facility of
$0.5 million. These decreases were partially offset by
increased sales to Rite Aid of $1.9 million and to
drugstore.com of $2.4 million.

Cost of Sales

Consolidated cost of sales, which includes product costs, costs
of warehousing, and distribution and occupancy costs, increased
$3.5 million, or 0.4%, to $898.7 million for the year
ended December 31, 2005 compared to $895.2 million for
2004. Consolidated cost of sales, as a percentage of net
revenue, were 68.2% for the year ended December 31, 2005
compared to 66.5% for 2004.

Product costs. Product costs decreased $1.4 million,
or 0.2%, to $655.7 million for the year ended
December 31, 2005 compared to $657.1 million for 2004.
Consolidated product costs, as a percentage of net revenue, were
49.8% for the year ended December 31, 2005 compared to
48.8% for 2004. This increase, as a percentage of net revenue,
was the result of increased promotional pricing in our retail
segment and increased discounts provided to our franchisees on
wholesale sales in our franchise segment.

Our vendors partially offset this increase by providing
reductions in product costs for their products that were
promotionally priced.

Warehousing and distribution costs. Warehousing and
distribution costs increased $0.6 million, or 1.2%, to
$51.4 million for the year ended December 31, 2005
compared to $50.8 million for 2004. This increase was
primarily a result of increased fuel costs that affected our
private fleet, as well as the cost of outside carriers, offset
by efficiency cost savings in wages and other warehousing costs.
Consolidated warehousing and distribution costs, as a percentage
of net revenue, were 3.9% for the year ended December 31,
2005 compared to 3.8% for 2004.

Occupancy costs. Occupancy costs increased
$4.3 million, or 2.3%, to $191.6 million for the year
ended December 31, 2005 compared to $187.3 million for
2004. This increase was the result of increased store rental
costs of $2.7 million and increased other occupancy costs
including depreciation of $1.6 million. Consolidated
occupancy costs, as a percentage of net revenue, were 14.5% for
the year ended December 31, 2005 compared to 13.9% for 2004.

Selling, General and Administrative Expenses

Our consolidated SG&A expenses, which include compensation
and related benefits, advertising and promotion expense, other
selling, general and administrative expenses, and amortization
expense, increased $2.1 million, or 0.6%, to
$349.9 million, for the year ended December 31, 2005
compared to $347.8 million for the same period in 2004.
These expenses, as a percentage of net revenue, were 26.6% for
the year ended December 31, 2005 compared to 25.9% for 2004.

Compensation and related benefits. Compensation and
related benefits decreased $1.4 million, or 0.6%, to
$228.6 million for the year ended December 31, 2005
compared to $230.0 million for 2004. The decrease was the
result of decreases in: (1) incentives and commission
expense of $2.3 million; (2) 401(k) company paid
matching expense of $1.1 million; and (3) other
wage-related expense of $0.4 million. The decreases were
offset by increases in base wage expense, primarily in our
retail stores, of $1.8 million and non-cash compensation
expense of $0.6 million.

Advertising and promotion. Advertising and promotion
expenses increased $0.7 million, or 1.6%, to
$44.7 million for the year ended December 31, 2005
compared to $44.0 million during 2004. Advertising expense
increased as a result of an increase in product-specific
television advertising of $7.0 million and reduction of
franchisee advertising contributions of $1.2 million,
offset by decreases in: (1) print advertising of
$3.1 million; (2) general marketing costs of
$2.9 million; (3) store signage and merchandising
costs of $1.0 million; and (4) other advertising
related expenses of $0.5 million.

Other SG&A. Other SG&A expenses, including
amortization expense, increased $2.8 million, or 3.8%, to
$76.6 million for the year ended December 31, 2005
compared to $73.8 million for 2004. This increase was due
to (1) legal costs for a proposed class action settlement
for certain products related to a third-party vendor of
$1.9 million; (2) increases in commission expense on
our consigned inventory sales of $1.1 million;
(3) increases in other professional expenses of
$0.9 million; and (4) a $1.3 million increase in
various other SG&A costs. These increases were partially
offset by a $1.2 million gain for our expected portion of
the proceeds from the Visa/ MasterCard antitrust litigation
settlement and a decrease in general insurance expense of
$1.2 million.

Foreign Currency Gain

We recognized a consolidated foreign currency gain of
$0.6 million for the year ended December 31, 2005
compared to $0.3 million for the year ended
December 31, 2004. This gain resulted primarily from
accounts payable activity with our Canadian subsidiary.

Other Income and Expense

Other income for the year ended December 31, 2005 includes
a transaction fee of $2.5 million, which was recognized for
the transfer of our Australian franchise business. For 2004, we
incurred a $1.3 million

charge for costs related to our preparation of a registration
statement to be used in connection with a proposed offering of
our common stock to the public. As that offering was not
completed, these costs were expensed.

Operating Income

As a result of the foregoing, operating income decreased
$28.5 million, or 28.3%, to $72.2 million for the year
ended December 31, 2005 compared to $100.7 million for
2004. Operating income, as a percentage of net revenue, was 5.5%
for the year ended December 31, 2005 compared to 7.5% for
2004.

Retail. Operating income decreased $30.5 million, or
28.3%, to $77.2 million for the year ended
December 31, 2005 compared to $107.7 million for 2004.
The primary reason for the decrease was lower retail margin, due
to lower diet sales and increased promotional retail pricing.

Franchise. Operating income decreased $10.4 million,
or 16.7%, to $52.0 million for the year ended
December 31, 2005 compared to $62.4 million for 2004.
This decrease is primarily attributable to a decrease in
wholesale sales and margin, due to increases in discounts
provided to our franchisees on wholesale sales and a reduced
number of operating franchisees domestically.

Manufacturing/ Wholesale. Operating income increased
$7.4 million, or 19.2%, to $46.0 million for the year
ended December 31, 2005 compared to $38.6 million for
2004. This increase was primarily the result of an increase in
license and other fee revenue from Rite Aid, increased wholesale
sales volumes to drugstore.com, improved margins on third-party
manufacturing sales, and increased manufacturing efficiencies at
our South Carolina manufacturing facility.

Warehousing and distribution costs. Unallocated
warehousing and distribution costs increased $0.7 million,
or 1.4%, to $50.0 million for the year ended
December 31, 2005 compared to $49.3 million for 2004.
This increase was primarily a result of increased fuel costs,
partially offset by reduced wages and other operating expenses
in our distribution centers.

Corporate costs. Corporate overhead cost decreased
$1.9 million, or 3.3%, to $55.5 million for the year
ended December 31, 2005 compared to $57.4 million for
2004. This decrease was primarily the result of the recognition
of a $1.2 million gain for our expected portion of the
proceeds from the Visa/ MasterCard antitrust litigation
settlement and a decrease in our insurance expense, offset by
the recognition of $1.9 million in legal costs for a
proposed class action settlement for certain products related to
a third-party vendor and increases in other professional fees.

Other. Other income for the year ended December 31,
2005 was $2.5 million, which represented the recognition of
transaction fee income related to the transfer of our Australian
franchise rights. For 2004, we incurred a $1.3 million
charge for costs related to the preparation of a SEC filing to
offer common stock to the public. As that offering was not
completed, these costs were expensed.

Interest Expense

Interest expense increased $8.6 million, or 24.9%, to
$43.1 million for the year ended December 31, 2005
compared to $34.5 million for 2004. This increase was
primarily attributable to the write-off of $3.9 million of
deferred financing fees, a result of the refinancing of our
variable interest rate bank debt, which was replaced with
$150.0 million of fixed interest rate senior notes in
January 2005.

Income Tax Expense

We recognized $10.7 million of consolidated income tax
expense during the year ended December 31, 2005 compared to
$24.5 million for 2004. The decreased tax expense for the
year ended December 31, 2005, was a result of a decrease in
income before income taxes of $37.1 million. The effective
tax rate for the year ended December 31, 2005 was 36.8%
compared to 37.0% for the year ended December 31, 2004.

As a result of the foregoing, consolidated net income decreased
$23.3 million to $18.4 million for the year ended
December 31, 2005 compared to $41.7 million for 2004.
Net income, as a percentage of net revenue, was 1.4% for the
year ended December 31, 2005 compared to 3.1% for 2004.

Other Comprehensive Income

We recognized $0.1 million of foreign currency gain for the
year ended December 31, 2005 compared to $0.9 million
for 2004. The amounts recognized in each period resulted from
foreign currency translation adjustments related to the
investment in and receivables due from our Canadian and
Australian subsidiaries.

Comparison of the Years Ended December 31, 2004 and
2003

Revenues

Our consolidated net revenues decreased $84.8 million, or
5.9%, to $1,344.7 million for the year ended
December 31, 2004 compared to $1,429.5 million for the
same period in 2003. The decrease was the result of decreases in
our Retail and Franchise segments, offset by slight increases in
our Manufacturing/ Wholesale segment.

Retail. Revenues in our Retail segment decreased
$57.7 million, or 5.4%, to $1,001.8 million for the
year ended December 31, 2004 compared to
$1,059.5 million for the same period in 2003. The revenue
decrease occurred primarily in our diet category and, to a
lesser extent, the sports nutrition category. The diet category
experienced a sharp drop in sales from 2003 primarily due to the
(1) discontinuation in June 2003 of sales of products
containing ephedra and (2) a decrease in sales of low carb
products. Sales from ephedra products were $35.2 million
for the year ended December 31, 2003. This decrease was
offset partially by the first quarter of 2004 sales of low-carb
products and diet products intended to replace the ephedra
products. However, beginning in the second quarter of 2004 and
continuing for the remainder of 2004, sales of low-carb products
decreased significantly from the prior year. Beginning in the
second quarter of 2004, and especially for the second half of
2004, our sports nutrition category experienced a decrease in
sales of meal replacement bars. We believe that these decreases
are largely a result of low-carb products and meal replacement
bars having become more readily available in the marketplace
since the prior year. Additionally, overall retail sales
declined as a result of operating 2,642 company-owned
stores as of December 2004 versus 2,748 as of December 2003. Our
store base declined primarily as a result of a store
rationalization plan developed in conjunction with the Numico
acquisition. This plan identified underperforming stores, the
majority of which were closed during the year. Comparable store
sales in company-owned domestic stores declined 4.1% for the
year ended December 31, 2004 compared with the same period
in 2003. Comparable store sales in company-owned Canadian stores
improved 3.6% for the year ended December 31, 2004 compared
with the same period in 2003.

Franchise. Revenues in our Franchise segment decreased
$29.0 million, or 11.4%, to $226.5 million for 2004
compared to $255.5 million for the same period in 2003.
These decreases were the result of: (1) a decrease in
wholesale product sales to franchisees of $17.2 million,
which was the result of lower retail sales at our franchised
stores, as our franchised stores had similar decreases in sales
of diet products as our company-owned stores; (2) the
Companys decision to limit sales of company-owned stores
to franchisees which resulted in a decline of $9.5 million,
as there were nine such sales in 2004 compared with 65 in 2003;
(3) a decrease in franchise fee revenue of
$1.2 million; and (4) a decrease in other revenue
areas of $1.1 million.

Manufacturing/ Wholesale. Revenues in our Manufacturing/
Wholesale segment increased $1.9 million, or 1.7%, to
$116.4 million for 2004 compared to $114.5 million for
2003. This increase was the result of increases in:
(1) third-party sales at our Australian manufacturing
facility of $2.1 million; (2) sales to Rite Aid of
$1.7 million; and (3) sales to drugstore.com of
$1.0 million. These increases were partially offset by a
decrease in third-party sales from our South Carolina
manufacturing facility of $2.9 million.

Consolidated cost of sales, which includes product costs, costs
of warehousing, and distribution and occupancy costs, decreased
$103.3 million, or 10.3%, to $895.2 million for 2004
compared to $998.5 million for 2003. Consolidated cost of
sales, as a percentage of net revenue, was 66.5% for 2004
compared to 69.9% for 2003.

Product costs. Product costs decreased
$82.1 million, or 11.1%, to $657.1 million for 2004
compared to $739.2 million for 2003. Consolidated product
costs as a percentage of net revenue dropped to 48.8% for the
year ended December 31, 2004 from 51.7% for 2003. This
decrease was a result of: (1) improved margins in the
Retail segment as a result of increased sales of higher margin
GNC proprietary products and decreased sales of lower margin
third-party products; (2) improved management of inventory
which resulted in lower product costs due to fewer inventory
losses from expired product; and (3) improved efficiencies
in our South Carolina manufacturing facility. Our product costs
in 2004 also included $1.3 million of expense resulting
from adjustments due to increased inventory valuation related to
the Numico acquisition.

Warehousing and distribution costs. Warehousing and
distribution costs increased $3.9 million, or 8.3%, to
$50.8 million for 2004 compared to $46.9 million for
2003. This increase in costs was primarily a result of a
$7.7 million increase in unreimbursed expenses from
trucking services provided to our vendors and former affiliates,
which was partially offset by reduced wages of $2.3 million
and operating expenses of $1.5 million for the year ended
December 31, 2004 compared with 2003. Consolidated
warehousing and distribution costs, as a percentage of net
revenue, were 3.8% for the year ended December 31, 2004
compared to 3.3% for 2003.

Occupancy costs. Occupancy costs decreased
$25.1 million, or 11.8%, to $187.3 million for the
year ended December 31, 2004 compared to
$212.4 million for 2003. This decrease was primarily due to
a reduction in depreciation expense of $17.3 million as a
result of the revaluation of our assets due to purchase
accounting relating to the Numico acquisition. Reductions in
rental expenses as a result of fewer stores operating and more
favorable lease terms, accounted for another $3.5 million
of the decrease. The remaining $4.3 million decrease
occurred in other occupancy related expenses. This was offset by
a one-time non-cash pre-tax rent charge of $0.9 million in
the fourth quarter of 2004 related to a correction in our lease
accounting policies. See the Basis of Presentation and
Summary of Significant Accounting Policies note to our
consolidated financial statements included in this prospectus.
Consolidated occupancy costs, as a percentage of net revenue,
were 13.9% for the year ended December 31, 2004 compared to
14.9% for 2003.

Selling, General and Administrative Expenses

Our consolidated SG&A expenses, including compensation and
related benefits, advertising and promotion expense, other
SG&A expenses, and amortization expense, decreased
$18.8 million, or 5.1%, to $347.8 million, for the
year ended December 31, 2004 compared to
$366.6 million for 2003. Our consolidated SG&A
expenses, including compensation and related benefits,
advertising and promotion expense, other SG&A expenses, and
amortization expense, as a percentage of net revenue, were 25.9%
during the year ended December 31, 2004 compared to 25.6%
for 2003.

Compensation and related benefits. Compensation and
related benefits decreased $21.7 million, or 8.6%, to
$230.0 million for the year ended December 31, 2004
compared to $251.7 million for 2003. The decrease was the
result of decreases in: (1) acquisition related charges for
change in control and retention bonuses recognized in 2003 of
$8.7 million; (2) incentives and commissions expense
of $6.2 million; (3) stock based compensation expense
recognized in 2003 of $4.3 million; (4) group health
insurance and workers compensation expense of $1.2 million;
(5) relocation costs of $1.0 million; and
(6) other compensation and related benefit expenses of
$0.3 million.

Advertising and promotion. Advertising and promotion
expenses increased $5.1 million, or 13.1%, to
$44.0 million for the year ended December 31, 2004
compared to $38.9 million during 2003. Advertising

Other SG&A. Other SG&A expenses, including
amortization expense, decreased $2.2 million, or 2.9%, to
$73.8 million for the year ended December 31, 2004
compared to $76.0 million for 2003. The primary reasons for
the decrease were: (1) a decrease of $3.6 million in
research and development costs as a result of the elimination of
allocated costs from Numico; (2) reduced bad debt expense
of $4.0 million; (3) reduced amortization expense of
$3.1 million; (4) reduced one time costs previously
incurred as a result of the Numico acquisition of
$2.4 million; and (5) a reduction of $1.3 million
in credit card transaction expenses. These decreases were offset
by: (1) a $4.6 million increase in insurance expense;
(2) a $3.5 million increase in other professional
fees, of which $0.8 million was related to our ongoing
efforts to prepare for Sarbanes-Oxley requirements and
$1.5 million related to the management service agreement
with Apollo Management V; (3) an increase of
$0.6 million in hardware and software maintenance costs;
and (4) an increase of $3.5 million in other operating
expenses.

Foreign Currency Gain

We recognized a foreign currency gain of $0.3 million for
the year ended December 31, 2004 compared to
$2.9 million for 2003. These gains resulted primarily from
accounts payable activity with our Canadian subsidiary.

Impairment of Goodwill and Intangible Assets

Our management initiated an evaluation of the carrying value of
goodwill and indefinite-lived intangible assets as of
October 1, 2004 and, based on that evaluation, found there
to be no charge to impairment for 2004. In October 2003, Numico
entered into an agreement to sell General Nutrition Companies,
Inc. for a purchase price that indicated a potential impairment
of our long-lived assets. Accordingly, management initiated an
evaluation of the carrying value of goodwill and
indefinite-lived intangible assets as of September 30,
2003. As a result of this evaluation, an impairment charge of
$709.4 million (pre-tax) was recognized for goodwill and
other indefinite-lived intangibles in accordance with
SFAS No. 142.

Other Income and Expense

In 2003, we received $7.2 million in non-recurring legal
settlement proceeds related to raw material pricing litigation.
We received no proceeds from legal settlements for 2004.

In 2004, we incurred a $1.3 million charge for costs
related to the preparation of a registration statement for an
offering of our common stock to the public. These costs were
expensed, as that offering was not completed and the
registration statement was withdrawn. There were no other
expenses in this category for 2003.

Operating Income (Loss)

Consolidated. As a result of the foregoing, operating
income increased $735.6 million, to $100.7 million for
the year ended December 31, 2004 compared to
$634.9 million operating loss for 2003. For the year ended
December 31, 2003, we recognized a $709.4 million
impairment charge relating to the write down of our goodwill and
intangible assets, with no impairment charges in 2004. Operating
income as a percentage of net revenue was 7.5% for the year
ended December 31, 2004 compared to a 44.4% operating loss
for 2003.

Retail. Operating income increased $22.0 million, or
25.7%, to $107.7 million for the year ended
December 31, 2004 compared to $85.7 million for 2003.
The increase was a result of improved margins

due to the sales shift to higher margin items, decreased
depreciation expense, and decreased rental costs due to
operating fewer stores, offset by an increase in advertising and
marketing expenses.

Franchise. Operating income decreased $3.7 million,
or 5.6%, to $62.4 million for the year ended
December 31, 2004 compared to $66.1 million for 2003.
The decrease was principally a result of fewer sales of
company-owned stores to franchisees and decreased wholesale
product sales.

Manufacturing/ Wholesale. Operating income increased
$12.9 million, or 50.2%, to $38.6 million for the year
ended December 31, 2004 compared to $25.7 million for
2003. This increase was primarily the result of increased
revenues to our third-party customers, more favorable contract
terms from a new agreement with Rite Aid, and decreased
depreciation expense at our manufacturing facilities.

Warehousing and distribution costs. Unallocated
warehousing and distribution costs increased $5.2 million,
or 11.8%, to $49.3 million for the year ended
December 31, 2004 compared to $44.1 million for 2003.
This increase in costs was primarily a result of decreased
income from trucking services provided to our vendors and former
affiliates, which was partially offset by reduced wages and
related expenses.

Corporate costs. Corporate overhead costs decreased
$8.7 million, or 13.2%, to $57.4 million for the year
ended December 31, 2004 compared to $66.1 million for
2003. This decrease was the result of decreases in:
(1) research and development costs; (2) wage and
benefit expense; and (3) one-time transaction costs related
to the Numico acquisition. These decreases were partially offset
by increases in insurance costs, professional fees, and other
operating expenses.

Other. Income from legal settlements decreased by
$7.2 million for the year ended December 31, 2004
compared to 2003. During 2003, we received non-recurring legal
settlement proceeds of $7.2 million related to raw material
pricing litigation. For 2004, we incurred a $1.3 million
charge for costs related to the preparation of a registration
statement for an offering of our common stock to the public.
These costs were expensed, as this offering was not completed
and the registration statement was withdrawn.

Interest Expense

Interest expense decreased $89.4 million, or 72.2%, to
$34.5 million for the year ended December 31, 2004
compared to $123.9 million for 2003. This decrease was
primarily attributable to the new debt structure after the
Numico acquisition, which consisted of: (1) a
$285.0 million term loan, with interest payable at an
average rate of 5.42% for 2004; (2) $215.0 million of
senior subordinated notes with interest payable at
81/2
%; and (3) a $75.0 million revolving loan
facility, with interest expense payable at an average rate of
0.79% for 2004, consisting of commitment fees and letter of
credit fees, of which $8.0 million was used for letters of
credit at December 31, 2004. Our new debt structure
replaces our previous debt structure, which included
intercompany debt of $1.8 billion, which was payable to
Numico at an annual interest rate of 7.5%.

Income Tax Expense (Benefit)

We recognized $24.5 million of consolidated income tax
expense during the year ended December 31, 2004 compared to
a $174.3 million benefit for 2003. The increased tax
expense for the year ended December 31, 2004 was a result
of an increase in income before income taxes of
$66.2 million. The effective tax rate for 2004 was a 37.0%
expense, compared to an effective tax rate of a 39.2% expense
for the 27 days ended December 31, 2003 and a 23.0%
benefit, for the period January 1, 2003 to December 4,
2003, which was primarily the result of a valuation allowance on
deferred tax assets associated with interest expense on the
related party push down debt from Numico. We believed that as of
December 4, 2003, it was unlikely that future taxable
income would be sufficient to realize the tax assets associated
with the interest expense on the related party push down debt
from Numico. Thus, a valuation allowance was recognized.
Pursuant to the purchase agreement entered into in connection
with Numico acquisition, Numico agreed to indemnify us for any
subsequent tax liabilities arising from periods prior to the
Numico acquisition.

As a result of the foregoing, consolidated net income increased
$626.2 million to $41.7 million for the year ended
December 31, 2004 compared to a loss of $584.5 million
for 2003. For 2003, we recognized a $709.4 million
(pre-tax) impairment charge relating to the write down of our
goodwill and intangible assets, with no impairment in 2004.
Although revenues decreased, these decreases were offset by
improved margins, operating cost reductions, a decrease in
impairment charges, and a significant decrease in interest
expense. Net income, as a percentage of net revenue, was 3.1%
for the year ended December 31, 2004, compared to (40.9)%
for 2003.

Other Comprehensive Income (Loss)

We recognized $0.9 million of foreign currency gain for the
year ended December 31, 2004 compared to $1.9 million
for 2003. The amounts recognized in each period resulted from
foreign currency adjustments related to the investment in and
receivables due from our Canadian and Australian subsidiaries.

Liquidity and Capital Resources

At March 31, 2006, we had $44.3 million in cash and
cash equivalents and $265.0 million in working capital
compared with $77.8 million in cash and cash equivalents
and $263.9 million in working capital at March 31,
2005. The $1.1 million increase in working capital was
primarily driven by our increase in inventory and accounts
receivable offset by a reduction in cash for restricted payments
to our common stockholders.

At December 31, 2005, we had $86.0 million in cash and
cash equivalents and $297.0 million in working capital
compared with $85.2 million in cash and cash equivalents
and $281.1 million in working capital at December 31,
2004. The $15.9 million increase in working capital was
primarily driven by our increase in inventory.

Cash Provided by Operating Activities

Cash provided by operating activities was $12.5 million and
$35.5 million for the three months ended March 31,
2006 and 2005, respectively. The primary reason for the decrease
was changes in working capital accounts offset by an increase in
net income. Net income increased $8.7 million for the year
ended March 31, 2006 compared with the same period in 2005.

For the three months ended March 31, 2006, inventory
increased $42.2 million, as a result of increases in our
finished goods, bulk inventory, and packaging supplies and a
decrease in our reserves. Inventory was increased in the first
quarter 2006 to support our increased sales in all business
segments, to ensure an in-stock position of our top-selling
products, and to provide new products to our customers.
Primarily as a result of the increase in inventory, accounts
payable increased by $25.8 million for the three months
ended March 31, 2006. Accounts receivable increased by
$7.0 million for the three months ended March 31, 2006
primarily due to increased wholesale sales to franchisees and
increased third-party sales by our Greenville, South Carolina
plant. Accrued taxes increased by $6.6 million for the
three months ended March 31, 2006 due to the increase in
net income. Additionally, we had a prepaid tax that was utilized
for the three months ended March 31, 2005.

For the three months ended March 31, 2005, inventory
increased $23.2 million, to support our strategy of
ensuring our top-selling products are always in stock. Primarily
as a result of the increase in inventory, accounts payable
increased by $26.2 million for the three months ended
March 31, 2005. Accrued interest for the three months ended
March 31, 2005 increased $7.2 million due to the
January 2005 issuance of the $150.0 million senior notes,
which has interest payable semi-annually on January 15 and July
15 each year.

Cash provided by operating activities was $64.2 million in
2005, $83.5 million in 2004, and $97.6 million during
2003. The primary reason for the decrease in each year was the
reduction in net

income (excluding the $709.4 million impairment in 2003)
and changes in working capital accounts during these years. Net
income decreased $23.3 million for the year ended
December 31, 2005 compared with 2004.

For the year ended December 31, 2005, inventory increased
$33.3 million, as a result of increases in our finished
goods, bulk inventory, and packaging supplies and a decrease in
our reserves. This inventory increase supports our strategy of
ensuring our top-selling products are always in stock. Franchise
notes receivable decreased by $6.7 million for the year
ended December 31, 2005, as a result of payments on
existing notes, fewer company-financed franchised store openings
than in prior years, and the closing of 171 franchised stores in
2005. Accrued interest for the year ended December 31, 2005
increased $6.0 million due to the issuance in 2005 of our
$150.0 million senior notes, which have interest payable
semi-annually on January 15 and July 15 each year. Other assets
decreased $6.7 million for the year ended December 31,
2005, which was primarily a result of a reduction in prepaids
and long-term deposits.

For the year ended December 31, 2004, inventory increased
$24.7 million, a result of increasing our finished goods
and bulk inventory and a decrease in our reserves. Franchise
notes receivable decreased $11.6 million in 2004, a result
of payments on existing notes and fewer franchised store
openings than in prior years. Accrued liabilities decreased
$28.9 million for the year ended December 31, 2004,
primarily a result of reductions of: (1) class action wage
accrual of $4.2 million; (2) incentives of
$4.5 million; (3) change of control payments of
$9.2 million; (4) store closings accruals of
$4.3 million; (5) certain insurance accruals of
$6.0 million; and (6) other accruals of
$0.7 million. The $6.0 million change in certain
insurance accruals related to our prepaid insurance premiums,
which were paid in cash at December 31, 2004, and at
December 31, 2003, were recorded as a liability and prepaid
through a financing arrangement. Net deferred taxes changed
$24.2 million in 2004 as a result of an increase in our
deferred tax liability, which was due to book versus tax timing
differences.

For the year ended December 31, 2003, receivables decreased
due to the receipt of $134.8 million of legal settlement
proceeds in January 2003, relating to raw material pricing
litigation. This was partially offset by the settlement of a
$70.6 million receivable due from Numico at
December 4, 2003, which was generated from periodic cash
sweeps by our former parent during the period January 1,
2003 to December 4, 2003. Net deferred taxes changed
$197.6 million in the period ended December 4, 2003, a
result of the $709.4 million impairment creating the
significant net loss position.

Cash Used in Investing Activities

We used cash from investing activities of $3.8 million for
the three months ended March 31, 2006 and $4.9 million
during the first quarter of 2005. Capital expenditures, which
were primarily for improvements to our retail stores and our
South Carolina manufacturing facility, were $3.7 million
for the three months ended March 31, 2006 and
$4.4 million during the first quarter of 2005.

We used cash from investing activities of $21.5 million for
2005, $27.0 million in 2004, and $771.5 million during
2003. We used $738.1 million to acquire General Nutrition
Companies, Inc. from Numico in December 2003. This
$738.1 million was reduced by approximately
$12.7 million related to a purchase price adjustment
received in April 2004, and increased by $7.8 million for
other acquisition costs, for a net purchase price of
$733.2 million. Capital expenditures decreased
$7.5 million from 2005 compared to 2004 and decreased
$4.5 million from 2004 compared to 2003. Capital
expenditures, which were primarily for improvements to our
retail stores and our South Carolina manufacturing facility,
were $20.8 million in 2005, $28.3 million for 2004,
and $32.8 million during 2003.

Cash Used in Financing Activities

We used cash in financing activities of approximately
$50.4 million for the three months ended March 31,
2006. In March 2006, Centers made a restricted payment of
$49.9 million to the holders of our common stock, which was
in compliance with Centers debt covenants and the terms of
our preferred stock as a one-time total payment. During the
three months ended March 31, 2006, we also paid down an
additional $0.5 million of debt.

In January 2005, Centers issued $150.0 million aggregate
principal amount of its senior notes and used the net proceeds
from this issuance, along with $39.4 million cash on hand,
to pay down $185.0 million of Centers debt under its
term loan facility. During 2005, we also paid $4.7 million
in fees related to the senior notes offering and paid down an
additional $2.0 million of debt.

We used cash in financing activities of approximately
$4.5 million for the year ended December 31, 2004. The
primary uses of cash for 2004 were for payments on long term
debt of $3.8 million and for payment of financing fees
related to the issuance of Centers senior subordinated
notes and a bank credit agreement amendment of
$1.1 million. In addition, we subsequently sold shares of
our common stock for net proceeds of approximately
$1.6 million to certain members of our management.

The primary use of cash in the period ended December 4,
2003 was principal payments on debt of Numico, of which we were
a guarantor. For the 27 days ended December 31, 2003,
the primary source of cash to fund the Numico acquisition was
from borrowings under Centers senior credit facility of
$285.0 million, proceeds from Centers issuance of the
senior subordinated notes of $215.0 million, and proceeds
from the issuance of shares of our common stock of
$177.5 million and of our Series A preferred stock of
$100.0 million.

Senior Credit Facility. In connection with the Numico
acquisition, Centers entered into a senior credit facility with
a syndicate of lenders. GNC and its domestic subsidiaries have
guaranteed Centers obligations under the senior credit
facility. The senior credit facility at December 31, 2004
consisted of a $285.0 million term loan facility and a
$75.0 million revolving credit facility. Centers borrowed
the entire $285.0 million under the original term loan
facility to fund part of the Numico acquisition, with none of
the $75.0 million revolving credit facility being utilized
to fund the Numico acquisition. This facility was subsequently
amended in December 2004. In January 2005, as a stipulation of
the December 2004 amendment to the senior credit facility,
Centers used the net proceeds of their senior notes offering of
$145.6 million, together with $39.4 million of cash on
hand, to repay a portion of the debt under the prior
$285.0 million term loan facility. We amended the senior
credit facility again in May 2006 in order to reduce the term
loan facility interest rates, remove a requirement to use a
portion of equity proceeds to reduce the senior credit facility,
and clarify our ability to make permitted restricted payments.
At March 31, 2006, the credit facility consisted of a
$95.9 million term loan facility and a $75.0 million
revolving credit facility.

The term loan facility matures on December 5, 2009. The
revolving credit facility matures on December 5, 2008. The
senior credit facility and permits Centers to prepay a portion
or all of the outstanding balance without incurring penalties
other than indemnifications for losses that occur when a
Eurodollar loan is prepaid on a date that is not the last day of
an interest period. The revolving credit facility allows for
$50.0 million to be used for outstanding letters of credit.
We used $9.9 million at March 31, 2006,
$8.6 million at December 31, 2005, and
$8.0 million at December 31, 2004. At March 31,
2006, $65.1 million of this facility was available for
borrowing. Interest on the senior credit facility carried an
average interest rate of 7.8% at March 31, 2006, 7.4% at
December 31, 2005, and 5.4% at December 31, 2004.
Interest is payable quarterly in arrears. The senior credit
facility contains customary covenants including financial tests
(including maximum senior secured leverage, minimum fixed charge
coverage ratio, and maximum capital expenditures), and certain
other limitations such as our ability to incur additional debt,
guarantee other obligations, grant liens on assets, make
investments, acquisitions, or mergers, dispose of assets, make
optional payments or modifications of other debt instruments,
and pay dividends or other payments on capital stock. See the
Long-Term Debt note to our consolidated financial
statements included in this prospectus.

Senior Notes. In January 2005, Centers issued
$150.0 million aggregate principal amount of senior notes,
with an interest rate of
85/8
% per year. The senior notes mature in 2011. Centers
used the net proceeds of this offering of $145.6 million,
together with $39.4 million of cash on hand, to repay
$185.0 million of the debt under its term loan facility.

notes mature in 2010 and bear interest at the rate of
81/2
% per year. The senior subordinated notes indenture
was subsequently supplemented in April 2004.

Common and Preferred Stock. In December 2003, our
principal stockholder and certain of our directors and members
of our senior management made an equity contribution of
$277.5 million in exchange for 29,566,666 shares of
common stock and in the case of the principal stockholder,
100,000 shares of our preferred stock. The proceeds of the
equity contribution were contributed to Centers to fund a
portion of the Numico acquisition price. In addition, we
subsequently sold shares of our common stock for net proceeds of
approximately $1.6 million to certain members of our
management. The proceeds of all of these sales were contributed
by us to Centers.

We expect to fund our operations through internally generated
cash and, if necessary, from borrowings under our
$75.0 million revolving credit facility. At March 31,
2006, we had $65.1 million available under our revolving
credit facility, after giving effect to $9.9 million
utilized to secure letters of credit. We expect our primary uses
of cash in the near future will be debt service requirements,
capital expenditures, and working capital requirements. As a
result of this offering, we will reduce our obligations by
redeeming our Series A preferred stock. We anticipate that
cash generated from operations, together with amounts available
under our revolving credit facility, will be sufficient to meet
our future operating expenses, capital expenditures, and debt
service obligations as they become due. However, our ability to
make scheduled payments of principal on, to pay interest on, or
to refinance our debt and to satisfy our other debt obligations
will depend on our future operating performance, which will be
affected by general economic, financial, and other factors
beyond our control. We believe that we have complied with our
covenant reporting and compliance in all material respects for
the first quarter of 2006 and for 2005.

Contractual Obligations

At March 31, 2006 there were no material changes in our
December 31, 2005 contractual obligations. The following
table summarizes our future minimum non-cancelable contractual
obligations at December 31, 2005:

Payments Due by Period

Less

Than 1

1-3

4-5

After 5

Total

Year

Years

Years

Years

(In millions)

Long-term debt obligations(1)

$

473.4

$

2.1

$

4.4

$

311.1

$

155.8

Scheduled interest payments(2)

186.3

39.7

78.7

66.8

1.1

Operating lease obligations(3)

339.7

98.1

134.1

64.8

42.7

Purchase obligations(4)(5)

16.1

4.2

4.1

3.3

4.5

$

1,015.5

$

144.1

$

221.3

$

446.0

$

204.1

(1)

These balances consist of the following debt obligations:
(a) $215.0 million for Centers senior
subordinated notes; (b) $150.0 million for
Centers senior notes; (c) $96.2 million for our
term loan facility; (d) $12.2 million for
Centers mortgage; and (e) less than $0.1 million
for capital leases. See the Long-Term Debt note to
our consolidated financial statements included in this
prospectus.

(2)

These balances represent the interest that will accrue on the
long-term obligations, which includes some variable debt
interest payments, which are estimated using current interest
rates. See the Long-Term Debt note to our
consolidated financial statements.

(3)

These balances consist of the following operating leases:
(a) $313.0 million for company-owned retail stores,
(b) $101.5 million for franchised retail stores, which
is offset by $101.5 million of sublease income from
franchisees, and (c) $26.7 million for various leases
for tractors/trailers, warehouses, automobiles, and various
equipment at our facilities. See the Long-Term Lease
Obligation note to our consolidated financial statements.

These balances consist of $3.5 million of advertising and
inventory commitments and $12.6 million related to a
management services agreement and credit facility administration
fees. The management service agreement was entered into between
us and Apollo Management V. In consideration of Apollo
Management Vs services, we are obligated to pay an annual
fee of $1.5 million for ten years commencing on
December 5, 2003. See the Related Party
Transactions note to our consolidated financial
statements. We are also required to pay a $0.1 million
credit facility administration fee annually to the
administrative agent under our senior credit facility.

(5)

This balance excludes $21.5 million related to contracts
with an advertising vendor, which were terminated by GNC and are
currently in litigation. See Business  Legal
Proceedings in this prospectus.

In addition to the obligations scheduled above, we have
100,000 shares of our Series A preferred stock that
accrue dividends at a rate of 12%, with dividends in arrears of
$31.6 million at March 31, 2006. See the
Preferred Stock note to our consolidated financial
statements. We plan to redeem all of the outstanding preferred
stock with net proceeds of this offering.

In addition to the obligations scheduled above, we have entered
into employment agreements with some of our executives that
provide for compensation and certain other benefits. Under
certain circumstances, including a change of control, some of
these agreements provide for severance or other payments, if
those circumstances would ever occur during the term of the
employment agreement.

Off Balance Sheet Arrangements

As of March 31, 2006 and 2005 and December 31, 2005,
2004, and 2003, we had no relationships with unconsolidated
entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities,
which would have been established for the purpose of
facilitating off balance sheet arrangements, or other
contractually narrow or limited purposes. We are, therefore, not
materially exposed to any financing, liquidity, market, or
credit risk that could arise if we had engaged in such
relationships.

We have a balance of unused barter credits on account with a
third-party barter agency. We generated these barter credits by
exchanging inventory with a third-party barter vendor. In
exchange, the barter vendor supplied us with barter credits. We
did not record a sale on the transaction as the inventory sold
was for expiring products that were previously fully reserved
for on our balance sheet. In accordance with Accounting
Principles Board Statement (APB) No. 29, a sale
is recorded based on either the value given up or the value
received, whichever is more easily determinable. The value of
the inventory was determined to be zero, as the inventory was
fully reserved. Therefore, these credits were not recognized on
the balance sheet and are only realized when we purchase
services or products through the bartering company. The credits
can be used to offset the cost of purchasing services or
products. The available credit balance was $8.9 million as
of March 31, 2006, $9.5 million as of
December 31, 2005, and $11.3 million as of
December 31, 2004. The barter credits are available for us
to use through April 1, 2009.

Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of changes in the value of
market risk sensitive instruments caused by fluctuations in
interest rates, foreign exchange rates, and commodity prices.
Changes in these factors could cause fluctuations in the results
of our operations and cash flows. In the ordinary course of
business, we are primarily exposed to foreign currency and
interest rate risks. We do not use derivative financial
instruments in connection with these market risks.

Foreign Exchange Rate Market
Risk

We are subject to the risk of foreign currency exchange rate
changes in the conversion from local currencies to the U.S.
dollar of the reported financial position and operating results
of our non-U.S. based

subsidiaries. We are also subject to foreign currency exchange
rate changes for purchase and services that are denominated in
currencies other than the U.S. dollar. The primary currencies to
which we are exposed to fluctuations are the Canadian Dollar and
the Australian Dollar. The fair value of our net foreign
investments and our foreign denominated payables would not be
materially affected by a 10% adverse change in foreign currency
exchange rates for the periods presented.

Interest Rate Market
Risk

A portion of our debt is subject to changing interest rates.
Although changes in interest rates do not impact our operating
income, the changes could affect the fair value of such debt and
related interest payments. As of December 31, 2005, we had
fixed rate debt of $377.2 million and variable rate debt of
$96.2 million. We have not entered into futures or swap
contracts at this time. Based on our variable rate debt balance
as of December 31, 2005, a 1% change in interest rates
would increase or decrease our annual interest cost by
$1.0 million.

For the three months ended March 31, 2006 there have been
no material changes to our market risks disclosed above.

Effect of Inflation

Inflation generally affects us by increasing costs of raw
materials, labor, and equipment. We do not believe that
inflation had any material effect on our results of operations
in the periods presented in our consolidated financial
statements.

Critical Accounting Estimates

You should review the significant accounting policies described
in the notes to our consolidated financial statements under the
heading Basis of Presentation and Summary of Significant
Accounting Policies included in this prospectus.

Stock-Based Compensation

We adopted SFAS No. 123(R) effective January 1,
2006. See the Stock Based Compensation Plans note to
our unaudited consolidated financial statements in this
prospectus for additional disclosure on the effects of adoption
and the valuation method and assumptions applied to current
period stock option grants.

Use of Estimates

Certain amounts in our financial statements require management
to use estimates, judgments, and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the periods presented. Our accounting policies
are described in the notes to our consolidated financial
statements under the heading Basis of Presentation and
Summary of Significant Accounting Policies. Our critical
accounting policies and estimates are described in this section.
An accounting estimate is considered critical if:



the estimate requires management to make assumptions about
matters that were uncertain at the time the estimate was made;



different estimates reasonably could have been used; or



changes in the estimate that would have a material impact on our
financial condition or our results of operations are likely to
occur from period to period.

Management believes that the accounting estimates used are
appropriate and the resulting balances are reasonable. However,
actual results could differ from the original estimates,
requiring adjustments to these balances in future periods.

We operate primarily as a retailer, through company-owned
stores, franchised stores, and, to a lesser extent, as a
wholesaler. On December 28, 2005, we started recognizing
revenue through product sales on our website, www.gnc.com. We
apply the provisions of Staff Accounting
Bulletin No. 104, Revenue Recognition. We
recognize revenues in our Retail segment at the moment a sale to
a customer is recorded. Gross revenues are reduced by actual
customer returns and a provision for estimated future customer
returns, which is based on managements estimates after a
review of historical customer returns. We recognize revenues on
product sales to franchisees and other third parties when the
risk of loss, title, and insurable risks have transferred to the
franchisee or third-party. We recognize revenues from franchise
fees at the time a franchised store opens or at the time of
franchise renewal or transfer, as applicable.

Inventories

Where necessary, we provide estimated allowances to adjust the
carrying value of our inventory to the lower of cost or net
realizable value. These estimates require us to make
approximations about the future demand for our products in order
to categorize the status of such inventory items as slow moving,
obsolete, or in excess of need. These future estimates are
subject to the ongoing accuracy of managements forecasts
of market conditions, industry trends, and competition. We are
also subject to volatile changes in specific product demand as a
result of unfavorable publicity, government regulation, and
rapid changes in demand for new and improved products or
services.

Accounts Receivable and Allowance for Doubtful
Accounts

The majority of our retail revenues are received as cash or cash
equivalents. The majority of our franchise revenues are billed
to the franchisees with varying terms for payment. We offer
financing to qualified domestic franchisees with the initial
purchase of a franchise location. The notes are demand notes,
payable monthly over periods of five to seven years. We generate
a significant portion of our revenue from ongoing product sales
to franchisees and third-party customers. An allowance for
doubtful accounts is established based on regular evaluations of
our franchisees and third-party customers financial
health, the current status of trade receivables, and historical
write-off experience. We maintain both specific and general
reserves for doubtful accounts. General reserves are based upon
our historical bad debt experience, overall review of our aging
of accounts receivable balances, general economic conditions of
our industry or the geographical regions, and regulatory
environments of our third-party customers and franchisees.

Impairment of Long-Lived Assets

Long-lived assets, including fixed assets and intangible assets
with finite useful lives, are evaluated periodically by us for
impairment whenever events or changes in circumstances indicate
that the carrying amount of any such asset may not be
recoverable. If the sum of the undiscounted future cash flows is
less than the carrying value, we recognize an impairment loss,
measured as the amount by which the carrying value exceeds the
fair value of the asset. These estimates of cash flow require
significant management judgment and certain assumptions about
future volume, revenue and expense growth rates, foreign
exchange rates, devaluation, and inflation. This estimate may
differ from actual cash flows.

Self-Insurance

We obtain insurance for the following areas: (1) general
liability; (2) product liability; (3) directors and
officers liability; (4) property insurance; and
(5) ocean marine insurance. We are self-insured for the
following additional areas: (1) medical benefits;
(2) workers compensation coverage in the State of
New York with a stop loss of $250,000; (3) physical
damage to our tractors, trailers, and fleet vehicles for field
personnel use; and (4) physical damages that may occur at
our company-owned store locations. We are not insured for
certain property and casualty risks due to the frequency and
severity of a loss, the cost of insurance, and the overall risk
analysis. Our associated liability for this self-insurance was
not significant

as of March 31, 2006, December 31, 2005, and
December 31, 2004. Before the Numico acquisition, General
Nutrition Companies, Inc. was included as an insured under
several of Numicos global insurance policies.

We carry product liability insurance with a retention of
$1.0 million per claim with an aggregate cap on retained
losses of $10.0 million. We carry general liability
insurance with retention of $100,000 per claim with an
aggregate cap on retained losses of $600,000. The majority of
our workers compensation and auto insurance are in a
deductible/retrospective plan. We reimburse the insurance
company subject to a $250,000 loss limit per workers
compensation claim and a $100,000 loss limit per auto liability
claim, with a combined aggregate cap on retained losses of
$7.3 million.

As part of our medical benefits program, we contract with
national service providers to provide benefits to our employees
for all medical, dental, vision, and prescription drug services.
We then reimburse these service providers as claims are
processed from our employees. We maintain a specific stop loss
provision of $250,000 per incident with a maximum limit up
to $2.0 million per participant, per benefit year. We have
no additional liability once a participant exceeds the
$2.0 million ceiling. Our liability for medical claims is
included as a component of accrued benefits in the Accrued
Payroll and Related Liabilities to our consolidated
financial statements. It was $3.0 million as of
March 31, 2006 and December 31, 2005 and
$2.6 million as of December 31, 2004.

Goodwill and Indefinite-Lived Intangible Assets

On an annual basis, we perform an evaluation of the goodwill and
indefinite lived intangible assets associated with our operating
segments. To the extent that the fair value associated with the
goodwill and indefinite-lived intangible assets is less than the
recorded value, we write down the value of the asset. The
valuation of the goodwill and indefinite-lived intangible assets
is affected by, among other things, our business plan for the
future, and estimated results of future operations. Changes in
the business plan or operating results that are different than
the estimates used to develop the valuation of the assets may
result in an impact on their valuation.

Historically, we have recognized impairments to our goodwill and
intangible assets based on declining financial results and
market conditions. The most recent valuation was performed at
October 1, 2005, and no impairment was found. There was no
impairment found during 2004. At September 30, 2003, we
evaluated the carrying value of our goodwill and intangible
assets, and recognized an impairment charge accordingly. See the
Goodwill and Intangible Assets note to our
consolidated financial statements. Based upon our improved
capitalization of our financial statements subsequent to the
Numico acquisition, the stabilization of our financial
condition, our anticipated future results based on current
estimates, and current market conditions, we do not currently
expect to incur additional impairment charges in the near future.

Leases

We have various operating leases for company-owned and
franchised store locations and equipment. Store leases generally
include amounts relating to base rental, percent rent and other
charges such as common area maintenance fees and real estate
taxes. Periodically, we receive varying amounts of
reimbursements from landlords to compensate us for costs
incurred in the construction of stores. We amortize these
reimbursements as an offset to rent expense over the life of the
related lease. We determine the period used for the
straight-line rent expense for leases with option periods and
conform it to the term used for amortizing improvements.

Income Taxes

We utilize the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and
liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for

the year in which those temporary differences are expected to be
recovered or settled. At any point in time we have various tax
audits in progress. As a result, we also record reserves for
estimates of probable settlements of these audits. The results
of these audits and negotiations with taxing authorities may
affect the ultimate settlement of these issues.

Recently Issued Accounting Pronouncements

In October 2005, the FASB issued Staff Position
FAS 13-1,
Accounting for Rental Costs Incurred during a Construction
Period, which requires rental costs associated with ground
or building operating leases that are incurred during a
construction period to be recognized as rental expense. This
Staff Position is effective for reporting periods beginning
after December 15, 2005, and retrospective application is
permitted but not required. The adoption of this statement did
not have a significant effect on our consolidated financial
position or results of operations, since we currently expense
such costs.

In September 2005, EITF No. 05-6, Determining the
Amortization Period for Leasehold Improvements Purchased after
Lease Inception or Acquired in a Business Combination, was
issued effective for leasehold improvements, within the scope of
this Issue, that are purchased or acquired in reporting periods
beginning after June 29, 2005. Early application of the
consensus was permitted in periods for which financial
statements have not been issued. This Issue addresses the
amortization period for leasehold improvements in operating
leases that are either placed in service significantly after and
not contemplated at or near the beginning of the initial lease
term or acquired in a business combination. We had already
adopted the practices effective for 2004, and the adoption did
not have a significant effect on our consolidated financial
position or results of operations.

In May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Correction, a
replacement of APB Opinion No. 20 and FASB Statement
No. 3. This statement replaces APB Opinion No. 20,
Accounting Changes, and FASB Statement No. 3, Reporting
Accounting Changes in Interim Financial Statements, and changes
the requirements for the accounting and reporting of a change in
accounting principle. This statement requires retrospective
application to prior periods financial statements of
changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative
effect of the change. This statement defines retrospective
application as the application of a different accounting
principle to prior accounting periods as if that principle had
always been used or as the adjustment of previously issued
financial statements to reflect a change in the reporting
entity. This statement also redefines restatement as the
revising of previously issued financial statements to reflect
the correction of an error. This statement is effective for
accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. We adopted this
standard beginning January 1, 2006. The adoption did not
have a material impact on our consolidated financial position or
results of operations.

In March 2005, the FASB issued FASB Interpretation No. 47,
Accounting for Conditional Asset Retirement
Obligations. The interpretation provides guidance relating
to the identification of and financial reporting for legal
obligations to perform an asset retirement activity. It requires
recognition of a liability for the fair value of a conditional
asset retirement obligation when incurred if the
liabilitys fair value can be reasonably estimated. The
interpretation also defines when an entity would have sufficient
information to reasonably estimate the fair value of an asset
retirement obligation. The interpretation was required to be
applied no later than the end of fiscal years ending after
December 15, 2005; with retrospective application for
interim financial information being permitted but not required.
We adopted the interpretation for 2005. The adoption did not
have a material impact on our consolidated financial position or
results of operations.

In December 2004, the FASB issued SFAS No. 123
(revised 2004) Share-Based Payment: an Amendment of FASB
Statements No. 123 and 95. SFAS No. 123(R)
sets accounting requirements for share-based
compensation to employees and disallows the use of the intrinsic
value method of accounting for stock compensation. We are
required to account for such transactions using a fair-value
method and to recognize compensation expense over the period
during which an employee is required to provide services in
exchange for the stock options and other equity-based
compensation issued to

employees. This statement was effective for us on
January 1, 2006 and we elected to use the modified
prospective application method. The impact of this statement on
our consolidated results of operations has been historically
disclosed on a pro forma basis and is now recognized as
compensation expense on a prospective basis. Based on the equity
awards outstanding as of March 31, 2006, we expect
compensation expense, net of tax, of $1.0 million to
$2.0 million in 2006.

In November 2004, the FASB issued SFAS No. 151,
Inventory Costs, an amendment of Accounting Research
Bulletin No. 43, to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). This statement requires
that those items be recognized as current-period charges
regardless of whether they meet the criterion of so
abnormal. In addition, this statement requires that
allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production
facilities. Companies are required to adopt the provisions of
this statement for fiscal years beginning after June 15,
2005. We adopted this standard starting January 1, 2006,
and it did not have a significant impact on our consolidated
financial position or results of operations.

With our worldwide network of over 5,800 locations and our
www.gnc.com website, we are the largest global specialty
retailer of health and wellness products, including VMHS
products, sports nutrition products, and diet products. We
believe that the strength of our
GNC®
brand, which is distinctively associated with health and
wellness, combined with our stores and website, give us
unmatched reach to consumers and uniquely position us to benefit
from the favorable trends driving growth in the nutritional
supplements industry and the broader health and wellness sector.
We derive our revenues principally from product sales through
our company-owned stores, franchise activities, and sales of
products manufactured in our facilities to third parties. Our
broad and deep product mix, which is focused on high-margin,
value-added nutritional products, is sold under our GNC
proprietary brands, including Mega
Men®,
Ultra
Mega®,
Pro
Performance®,
and Preventive
Nutrition®,
and under nationally recognized third-party brands.

We have a unique business model that has enabled us to establish
significant credibility and brand equity with both our vendors
and our customers. Our domestic retail network, which is
approximately nine times larger than the next largest
U.S. specialty retailer of nutritional supplements,
provides an unmatched platform for our vendors to distribute
their products to their target consumer. This gives us
tremendous leverage with our vendor partners and has enabled us
to negotiate product exclusives or first-to-market
opportunities. In addition, our in-house product development
capabilities enable us to offer our customers proprietary
merchandise that can only be purchased through our stores or our
website. As the nutritional supplement consumer often requires
knowledgeable customer service, we also differentiate ourselves
from mass and drug retailers with our well-trained sales
associates. With our expansive retail network, our
differentiated merchandise offering, and our quality customer
service, we offer our customers convenience, value, and service
resulting in a unique shopping experience.

Industry Overview

We operate within the large and growing U.S. nutritional
supplements retail industry. According to Nutrition Business
Journals Supplement Business Report 2005, our industry
generated an estimated $21.0 billion in sales in 2005 and
grew at a compound annual growth rate of 5.5% between 1997 and
2004. Our industry is also highly fragmented, and we believe
this fragmentation provides large operators, like us, the
ability to compete more effectively due to scale advantages.

We expect several key demographic, healthcare, and lifestyle
trends to drive the continued growth of our industry. These
trends include:



Increased Focus on Healthy Living: Consumers are leading
more active lifestyles and becoming increasingly focused on
healthy living, nutrition, and supplementation. According to the
Nutrition Business Journal, a study by the Hartman Group found
that 85% of the American population today is involved to some
degree in health and wellness compared to 70% to 75% a few years
ago. We believe that growth in the nutritional supplements
industry will continue to be driven by consumers who
increasingly embrace health and wellness as a critical part of
their lifestyles.



Aging Population: The average age of the
U.S. population is increasing. U.S. Census Bureau data
indicates that the number of Americans age 65 or older is
expected to increase by 54% from 2000 to 2010. We believe that
these consumers are significantly more likely to use nutritional
supplements, particularly VMHS products, than younger persons.



Rising Healthcare Costs and Use of Preventive Measures:
Healthcare related costs have increased substantially in the
United States. A preliminary survey released by Mercer Human
Resource Consulting in 2005 found that employers anticipate an
almost 10% increase in healthcare costs in the next year, about
three times the rate of general inflation, if they leave
benefits unchanged. To reduce medical costs and avoid the
complexities of dealing with the healthcare system, and given
increasing incidence of medical problems and concern over the
use and effects of prescription

drugs, many consumers take preventive measures, including
alternative medicines and nutritional supplements.



Increasing Focus on Fitness: In total, U.S. health
club memberships increased 4.9% between January 2004 and January
2005 from 39.4 million members to a record
41.3 million and has grown 40% from 29.5 million in
2003, according to the International Health, Racquet &
Sportsclub Association. We believe that the growing number of
fitness-oriented consumers, at increasingly younger ages, are
interested in taking sports nutrition products to increase
energy, endurance, and strength during exercise.

Participants in our industry include specialty retailers,
supermarkets, drugstores, mass merchants, multi-level marketing
organizations, mail-order companies, and a variety of other
smaller participants. The nutritional supplements sold through
these channels are divided into four major product categories:
VMHS; sports nutrition products; diet products; and other
wellness products. Most supermarkets, drugstores, and mass
merchants have narrow nutritional supplement product offerings
limited primarily to simple vitamins and herbs, with less
knowledgeable sales associates than specialty retailers. We
believe that the market share of supermarkets, drugstores, and
mass merchants over the last five years has remained relatively
constant.

Business Overview

The following charts illustrate, for 2005, the percentage of our
net revenue generated by our three business segments and the
percentage of our net U.S. retail revenue generated by our
product categories:

2005 Net Revenue by Segment

2005 Net Retail Revenue by Product Category

For the three months ended March 31, 2006, net revenue by
segment was Retail 76%, Franchise 16%, and Manufacturing/
Wholesale 8%. Net U.S. retail revenue by product category
was VMHS 39%, Sports 35%, Diet 17%, and Other 9%. Throughout
2005 and the first quarter of 2006, we did not have any
meaningful concentration of sales from any single product or
product line. We believe this baseline of sales from which we
now operate is a solid, recurring base from which we will
continue to grow our revenues. Our sales trends in the first
half of 2005 were impacted by a decline in diet products related
to the slowdown of the
low-carbohydrate diet
trend. Excluding the diet category, we have generated positive
same store sales for seven of the last nine quarters since the
beginning of 2004.

Retail Locations

Our retail network represents the largest specialty retail store
network in the nutritional supplements industry according to
Nutrition Business Journals Supplement Business Report
2005. As of March 31, 2006, there were 5,817 GNC store
locations globally, including:



2,529 company-owned stores in the United States (all 50 states,
the District of Columbia, and Puerto Rico);

Most of our company-owned and franchised U.S. stores are
between 1,000 and 2,000 square feet and are located in shopping
malls and strip centers. Our leading market position is a
relatively unique phenomenon in specialty retailing as we have
approximately nine times the domestic store base of our nearest
U.S. specialty retail competitor.

Website. In December 2005 we also started selling
products through our website, www.gnc.com. This additional sales
channel has enabled us to market and sell our products in
regions where we do not have retail operations or have limited
operations. Some of the products offered on our website may not
be available at our retail locations, thus enabling us to
broaden the assortment of products available to our customers.
The ability to purchase our products through the internet also
offers a convenient method for repeat customers to evaluate and
purchase new and existing products. To date, we believe that a
majority of the sales generated by our website are incremental
to the revenues from our retail locations.

Franchise Activities

We generate income from franchise activities primarily through
product sales to franchisees, royalties on franchise retail
sales, and franchise fees. To assist our franchisees in the
successful operation of their stores and to protect our brand
image, we offer a number of services to franchisees including
training, site selection, construction assistance, and
accounting services. We believe that our franchise program
enhances our brand awareness and market presence and will enable
us to expand our store base internationally with limited capital
expenditures on our part. Over the last year, we realigned our
franchise system with our corporate strategies and re-acquired
or closed unprofitable or non-compliant franchised stores in
order to improve the financial performance of the franchise
system.

Store-within-a-Store Locations

To increase brand awareness and promote access to customers who
may not frequent specialty nutrition stores, we entered into a
strategic alliance in December 1998 with Rite Aid to open our
GNC store-within-a-store locations. Through this strategic
alliance, we generate revenues from fees paid by Rite Aid for
new store-within-a-store openings, sales to Rite Aid of our
products at wholesale prices, the manufacture of Rite Aid
private label products, and retail sales of certain consigned
inventory. In May 2004, we extended our alliance with Rite Aid
through April 30, 2009, with Rite Aids commitment to
open 300 new store-within-a-store locations by December 31,
2006. As of March 31, 2006, Rite Aid had opened 183 of
these 300 new store-within-a-store locations.

Marketing

We market our proprietary brands of nutritional products through
an integrated marketing program that includes television, print,
and radio media, storefront graphics, direct mailings to members
of our Gold Card loyalty program, and point of purchase
promotional materials.

Manufacturing and Distribution

With our technologically sophisticated manufacturing and
distribution facilities supporting our retail stores, we are a
vertically integrated producer and supplier of high-quality
nutritional supplements. By controlling the production and
distribution of our proprietary products, we can protect product
quality, monitor delivery times, and maintain appropriate
inventory levels.

Products

We offer a wide range of high-quality nutritional supplements
sold under our GNC proprietary brand names, including Mega Men,
Ultra Mega, Pro Performance, and Preventive Nutrition, and under
nationally recognized third-party brand names. We operate in
four major nutritional supplement categories:

VMHS; sports nutrition products; diet products; and other
wellness products. We offer an extensive mix of brands and
products, including approximately 1,900 SKUs across
multiple categories. This variety is designed to provide our
customers with a vast selection of products to fit their
specific needs. Sales of our proprietary brands at our
company-owned stores represented approximately 47% of our net
retail product revenues for 2005 and 44% for the first quarter
of 2006.

Consumers may purchase a GNC Gold Card in any GNC store or at
www.gnc.com for $15.00. A Gold Card allows a consumer to save
20% on all store and on-line purchases on the day the card is
purchased and during the first seven days of every month for a
year. Gold Card members also receive personalized mailings and
e-mails with product
news, nutritional information, and exclusive offers.

Products are delivered to our retail stores through our
distribution centers located in Leetsdale, Pennsylvania;
Anderson, South Carolina; and Phoenix, Arizona. Our distribution
centers support our company-owned stores as well as franchised
stores and Rite Aid locations. Our distribution fleet delivers
our finished goods and third-party products through our
distribution centers to our company-owned and domestic
franchised stores on a weekly or biweekly basis depending on the
sales volume of the store. Each of our distribution centers has
a quality control department that monitors products received
from our vendors to ensure quality standards.

Based on data collected from our point of sale systems,
excluding certain required accounting adjustments of
$0.4 million for 2003, $3.4 million for 2004,
$3.0 million for 2005, $0.5 million for the first
quarter of 2005, and $3.9 million for the first quarter of
2006 below is a comparison of our company-owned domestic store
retail product sales by major product category and the
percentages of our company-owned domestic store retail product
sales for the periods shown:

Three Months Ended

Year Ended December 31,

March 31,

U.S. Retail Product Categories (in dollars):

2003(1)

2004

2005

2005

2006

(Unaudited)

(in millions)

VMHS

$

364.5

$

362.6

$

377.7

$

99.2

$

108.6

Sports Nutrition Products

300.2

293.2

330.3

80.3

98.0

Diet Products

265.6

193.1

135.2

39.7

45.8

Other Wellness Products

79.6

95.1

87.8

22.6

25.2

Total U.S. Retail Revenues

$

1,009.9

$

944.0

$

931.0

$

241.8

$

277.6

Three Months Ended

Year Ended December 31,

March 31,

U.S. Retail Product Categories (in percentages):

2003(1)

2004

2005

2005

2006

VMHS

36.1%

38.4%

40.6%

41.0%

39.1%

Sports Nutrition Products

29.7%

31.1%

35.5%

33.2%

35.3%

Diet Products

26.3%

20.5%

14.5%

16.4%

16.5%

Other Wellness Products

7.9%

10.0%

9.4%

9.4%

9.1%

Total U.S. Retail Revenues

100.0%

100.0%

100.0%

100.0%

100.0%

(1)

This data is shown on a combined basis for comparability
purposes and represents the sum of the period from
January 1, 2003 through December 4, 2003 and the
27 days ended December 31, 2003.

Sales in the diet category declined significantly from 2003 to
2005 as a result of (1) our decision to cease selling
ephedra and ephedra-related products in June 2003 and (2) a
decrease in demand for low carbohydrate diet products. The
percentage of our retail revenue generated by the sale of diet
products for the 12 months ended March 31, 2006 is
consistent with our historical norms. As a result, we believe we
are not as dependent on any one product or product category and
thus are better positioned for future growth.

We sell vitamins and minerals in single vitamin and
multi-vitamin form and in different potency levels. Our vitamin
and mineral products are available in liquid, tablets, soft
gelatin, and hard-shell capsules and powder forms. Many of our
special vitamin and mineral formulations, such as Mega Men and
Ultra Mega, are available only at GNC locations. In addition to
our selection of VMHS products with unique formulations, we also
offer the full range of standard alphabet vitamins.
We sell herbal supplements in various solid dosage and soft
gelatin capsules, tea, and liquid forms. We have consolidated
our traditional herbal offerings under a single umbrella brand,
Herbal
Plus®.
In addition to the Herbal Plus line, we offer a full line of
whole food-based supplements and top selling herb and natural
remedy products. Our target customers for VMHS products are
women over the age of 35.

We also offer a variety of specialty products in our GNC and
Preventive Nutrition product lines. These products emphasize
third-party research and available literature regarding the
positive benefits from certain ingredients. These offerings
include products designed to provide nutritional support to
specific areas of the body, such as joints, the heart and blood
vessels, and the digestive function.

Sports Nutrition Products

Sports nutrition products are designed to be taken in
conjunction with an exercise and fitness regimen. Our target
consumer for sports nutrition products is the 18-49 year
old male. We typically offer a broad selection of sports
nutrition products, such as protein and weight gain powders,
sports drinks, sports bars, and high potency vitamin
formulations, including GNC brands such as Pro Performance and
popular third-party products.

Diet Products

Diet products consist of various formulas designed to supplement
the diet and exercise plans of weight conscious consumers. Our
target consumer for diet products is the 18-49 year old
female. We typically offer a variety of diet products, including
pills, meal replacements, shakes, diet bars, and teas. Our
retail stores offer our proprietary and third-party products
suitable for different diet and weight management approaches,
including low-carbohydrate and products designed to increase
thermogenesis (a change in the bodys metabolic rate
measured in terms of calories) and metabolism. We also offer
several diet products, including our Total Lean and our Body
Answerstm
product lines.

Other Wellness Products

Other Wellness Products is a comprehensive category that
consists of sales of our Gold Card preferred membership and
sales of other nonsupplement products, including cosmetics, food
items, health management products, books, and video tapes.

Product Development

We believe a key driver of customer traffic and purchases is the
introduction of new products. According to the GNC 2005
Awareness Tracking Study Report commissioned by GNC from Parker
Marketing Research, consumers surveyed rated the availability of
new, innovative products as an emerging strength of
our business. We identify changing customer trends through
interactions with our customers and leading industry vendors to
assist in the development, manufacturing, and marketing of our
new products. We develop proprietary products independently and
through the collaborative effort of our dedicated development
team. During 2005, we targeted our product development efforts
on sports nutrition products, condition specific products, and
specialty vitamins.

Research and Development

We have an internal research and development group that performs
scientific research on potential new products and enhancements
to existing products, in part to assist our product development
team in

creating new products, and in part to support claims that may be
made as to the purpose and function of the product.

Business Segments

We generate revenues from our three business segments, Retail,
Franchise, and Manufacturing/Wholesale. The following chart
outlines our business segments and the historical contribution
to our consolidated revenues by those segments, after
intercompany eliminations. For a description of operating income
(loss) by business segment, our total assets by business
segment, total revenues by geographic area, and total assets by
geographic area, see the Segments note to our
consolidated financial statements.

Three Months

Year Ended December 31,

Ended March 31,

2003(1)

2004

2005

2005

2006

(Unaudited)

(in millions)

Segment Revenues (in dollars):

Retail

$

1,059.5

$

1,001.8

$

989.4

$

255.2

$

294.9

Franchise

255.5

226.5

212.8

52.6

60.3

Manufacturing/ Wholesale

114.5

116.4

115.5

28.6

31.7

Total

$

1,429.5

$

1,344.7

$

1,317.7

$

336.4

$

386.9

Three Months

Year Ended December 31,

Ended March 31,

2003(1)

2004

2005

2005

2006

Segment Revenues (in percentages):

Retail

74.1%

74.5%

75.1%

75.9%

76.2%

Franchise

17.9%

16.8%

16.1%

15.6%

15.6%

Manufacturing/ Wholesale

8.0%

8.7%

8.8%

8.5%

8.2%

Total

100.0%

100.0%

100.0%

100.0%

100.0%

(1)

This data is shown on a combined basis for comparability
purposes and represents the sum of the period from
January 1, 2003 through December 4, 2003 and the
27 days ended December 31, 2003.

Retail

Our Retail segment generates revenues primarily from sales of
products to customers at our company-owned stores in the United
States and Canada, and on December 28, 2005 we started
selling products through our website, www.gnc.com.

Locations

As of March 31, 2006, we operated 2,661 company-owned
stores across 50 states and in Canada, Puerto Rico,
and Washington, D.C. Most of our U.S. company-owned
stores are between 1,000 and 2,000 square feet and are
located primarily in shopping malls and strip shopping centers.
Traditional mall and strip center locations typically generate a
large percentage of our total retail sales. With the exception
of our downtown stores, all of our company-owned stores follow
one of two consistent formats, one for mall locations and one
for strip shopping center locations. Our store graphics are
periodically redesigned to better identify with our GNC
customers and provide product information to allow the consumer
to make educated decisions regarding product purchases and
usage. Our product labeling is consistent within our product
lines and the stores are designed to present a unified approach
to packaging with emphasis on added information for the
consumer. As an on-going practice, we continue to reset and
upgrade all of our

As a means of enhancing our operating performance and building
our store base, we began opening franchised locations in 1988.
As of March 31, 2006, there were 1,996 franchised stores
operating, including 1,123 stores in the United States and 873
stores operating in international locations. Approximately 88%
of our franchised stores in the United States are in strip
shopping centers and are typically between 1,000 and
1,800 square feet. The international franchised stores are
smaller, typically between 600 and 650 square feet and,
depending upon the country and cultural preferences, are located
in mall, strip center, street, or store-within-a-store
locations. Typically, our international stores have a store
format and signage similar to our U.S. franchised stores.
To assist our franchisees in the successful operation of their
stores and to protect our brand image, we offer site selection,
construction assistance, accounting services, and a three-part
training program, which consists of classroom instruction,
training in a company-owned location, and actual
on-site training after
the franchised store opens. We believe we have good
relationships with our franchisees, as evidenced by our
franchisee renewal rate of over 93% between 2001 and 2005. We do
not rely heavily on any single franchise operator in the United
States, since the largest franchisee owns and/or operates 15
store locations.

All of our franchised stores in the United States offer both our
proprietary products and third-party products, with a product
selection similar to that of our company-owned stores. Our
international franchised stores offer a more limited product
selection than our franchised stores in the United States.
Products are distributed to our franchised stores in the United
States through our distribution centers and transportation fleet
in the same manner as our company-owned stores.

Franchises in the United States

Revenues from our franchisees in the United States accounted for
approximately 78% of our total franchise revenues for 2005. In
2005, new franchisees in the United States were required to pay
an initial fee of $40,000 for a franchise license. Existing GNC
franchise operators may purchase an additional franchise license
for a $30,000 fee. We typically offer limited financing to
qualified franchisees in the United States for terms up to five
years. Once a store begins operations, franchisees are required
to pay us a continuing royalty of 6% of sales and contribute 3%
of sales to a national advertising fund. Our standard franchise
agreements for the United States are effective for a ten-year
period with two five-year renewal options. At the end of the
initial term and each of the renewal periods, the renewal fee is
generally 33% of the franchisee fee that is then in effect. The
franchisee renewal option is at our election for all franchise
agreements executed after December 1995. Our franchisees in the
United States receive limited geographical exclusivity and are
required to follow the GNC store format.

Franchisees must meet certain minimum standards and duties
prescribed by our franchise operations manual and we conduct
periodic field visit reports to ensure our minimum standards are
maintained. Generally, we enter into a five-year lease with one
five-year renewal option with landlords for our franchised
locations in the United States. This allows us to secure space
at cost-effective rates, which we sublease to our franchisees at
cost. By subleasing to our franchisees, we have greater control
over the location and have greater bargaining power for lease
negotiations than an individual franchisee typically would have,
and we can elect not to renew subleases for underperforming
locations. If a franchisee does not meet specified performance
and appearance criteria, the franchise agreement outlines the
procedures under which we are permitted to terminate the
franchise agreement. In these situations, we may take possession
of the location, inventory, and equipment, and operate the store
as a company-owned store or

re-franchise the location. Our U.S. franchise agreements
and operations in the United States are regulated by the FTC.
See  Government Regulation and
 Franchise Regulation.

International Franchises

Revenues from our international franchisees accounted for
approximately 22% of our total franchise revenues for 2005. In
2005, new international franchisees were required to pay an
average initial fee of approximately $20,000 for a franchise
license for each store and on average continuing royalty fees of
approximately 5%, with fees and royalties varying depending on
the country and the store type. Our franchise program has
enabled us to expand into international markets with limited
capital expenditures. We expanded our international presence
from 457 international franchised locations at the end of 2001
to 873 international locations as of March 31, 2006,
without incurring any capital expenditures related to this
expansion. Our international franchised stores generate greater
sales per square foot of store space than our domestic store
locations. However, we typically generate less revenue from
franchises outside the United States due to lower international
royalty rates and due to the franchisees purchasing a smaller
percentage of products from us compared to our domestic
franchisees.

Franchisees in international locations enter into development
agreements with us for either full-size stores, a
store-within-a-store at a host location, or wholesale
distribution center operations. The development agreement grants
the franchisee the right to develop a specific number of stores
in a territory, often the entire country. The international
franchisee then enters into a franchise agreement for each
location. The full-size store franchise agreement has an initial
ten-year term with two five-year renewal options. At the end of
the initial term and renewal periods, the international
franchisee has the option to renew the agreement at 33% of the
franchise fee that is then in effect. Franchise agreements for
international store-within-a-store locations have an initial
term of five years, with two five-year renewal options. At the
end of the initial term and each of the renewal periods, the
international franchisee of a store-within-a-store location has
the option to renew the agreement for 50% of the franchise fee
that is then in effect. Our international franchisees often
receive exclusive franchising rights to the entire country
franchised, excluding military bases. Our international
franchisee must meet minimum standards and duties similar to our
U.S. franchisees and our international franchise
agreements, and international operations may be regulated by
various country, local, and international laws. See
 Government Regulation and
 Franchise Regulation.

Manufacturing/ Wholesale

Our Manufacturing/ Wholesale segment is comprised of our
manufacturing operations in South Carolina and Australia and our
wholesale sales business. This segment supplies our Retail and
Franchise segments as well as various third parties with
finished products. Our Manufacturing/ Wholesale segment
generates revenues through sales of manufactured products to
third parties, and the sale of our proprietary and third-party
brand products to Rite Aid and drugstore.com. Our wholesale
operations, including our Rite Aid and drugstore.com wholesale
operations, are supported primarily by our Anderson, South
Carolina distribution center.

Manufacturing

Our technologically sophisticated manufacturing and warehousing
facilities support our Retail and Franchise segments and enable
us to control the production and distribution of our proprietary
products, to better control costs, to protect product quality,
to monitor delivery times, and to maintain appropriate inventory
levels. We operate two main manufacturing facilities in the
United States, one in Greenville, South Carolina and one in
Anderson, South Carolina. We also operate a smaller facility in
Australia. We utilize our plants in the United States primarily
for the production of proprietary products. Our manufacturing
operations are designed to allow low-cost production of a
variety of products of different quantities, sizes, and
packaging configurations while maintaining strict levels of
quality control. Our manufacturing procedures are designed to
promote consistency and quality in our finished goods. We
conduct sample testing on raw materials and finished products,
including weight, purity, and micro-

bacterial testing. Our manufacturing facilities also service our
wholesale operations, including the manufacture and supply of
Rite Aid private label products for distribution to Rite Aid
locations. We use our available capacity at these facilities to
produce products for sale to third-party customers.

The principal raw materials used in the manufacturing process
are natural and synthetic vitamins, herbs, minerals, and
gelatin. We maintain multiple sources for the majority of our
raw materials, with the remaining being single-sourced due to
the uniqueness of the material. As of March 31, 2006, no
one vendor supplied more than 10% of our raw materials. Our
distribution fleet delivers raw materials and components to our
manufacturing facilities and also delivers our finished goods
and third-party products to our distribution centers.

Wholesale

Store-within-a-Store Locations

To increase brand awareness and promote access to customers who
may not frequent specialty nutrition stores, we entered into a
strategic alliance with Rite Aid to open GNC
store-within-a-store locations. As of March 31, 2006, we
had 1,160 store-within-a-store locations. Through this strategic
alliance, we generate revenues from sales to Rite Aid of our
products at wholesale prices, the manufacture of Rite Aid
private label products, retail sales of certain consigned
inventory, and license fees. We are Rite Aids sole
supplier for the
PharmAssure®
vitamin brand and a number of Rite Aid private label
supplements. In May 2004, we extended our alliance with Rite Aid
through April 30, 2009, with Rite Aids commitment to
open 300 new store-within-a-store locations by December 31,
2006. As of March 31, 2006, Rite Aid had opened 183 of
these 300 new store-within-a-store locations.

Distribution Agreement with drugstore.com

We have an internet distribution agreement with drugstore.com,
inc.; its initial term expires in July 2009. Through this
strategic alliance, drugstore.com was the exclusive internet
retailer of our proprietary products, the
PharmAssure®
vitamin brand, and certain other nutritional supplements until
June 2005, when this exclusive relationship terminated. This
alliance allows us to access a larger base of customers, who may
not otherwise live close to, or have the time to visit, a GNC
store and provides an internet distribution channel in addition
to www.gnc.com. We generate revenues from the distribution
agreement with drugstore.com through sales of our proprietary
and third-party products on a wholesale basis and through retail
sales of certain other products on a consignment basis.

Employees

As of March 31, 2006, we had a total of
4,904 full-time and 7,736 part-time employees, of whom
approximately 10,368 were employed in our Retail segment, 35
were employed in our Franchise segment, 1,152 were employed in
our Manufacturing/ Wholesale segment, 476 were employed in
corporate support functions, and 608 were employed in Canada.
None of our employees belongs to a union or is a party to any
collective bargaining or similar agreement. We consider our
relationships with our employees to be good.

Competition

The U.S. nutritional supplements retail industry is a
large, highly fragmented, and growing industry, with no single
industry participant accounting for a majority of total industry
retail sales. Competition is based primarily on price, quality,
and assortment of products, customer service, marketing support,
and availability of new products. In addition, the market is
highly sensitive to the introduction of new products.

We compete with publicly owned and privately owned companies,
which are highly fragmented in terms of geographical market
coverage and product categories. We compete with other specialty
retailers, supermarkets, drugstores, mass merchants, multi-level
marketing organizations, mail-order companies, other internet
sites, and a variety of other smaller participants. In addition,
the market is highly sensitive to the introduction of new
products, including various prescription drugs, which may
rapidly capture a

significant share of the market. In the United States, we
compete with supermarkets, drugstores, and mass merchants with
heavily advertised national brands manufactured by large
pharmaceutical and food companies and other retailers. Most
supermarkets, drugstores, and mass merchants have narrow product
offerings limited primarily to simple vitamins and herbs and
popular third-party diet products. Our international competitors
also include large international pharmacy chains and major
international supermarket chains as well as other large
U.S.-based companies
with international operations. Our wholesale and manufacturing
operations also compete with other wholesalers and manufacturers
of third-party nutritional supplements.

Trademarks and Other Intellectual Property

We believe trademark protection is particularly important to the
maintenance of the recognized brand names under which we market
our products. We own or have rights to material trademarks or
trade names that we use in conjunction with the sale of our
products, including the GNC brand name. We also rely upon trade
secrets, know-how, continuing technological innovations, and
licensing opportunities to develop and maintain our competitive
position. We protect our intellectual property rights through a
variety of methods, including trademark, patent, and trade
secret laws, as well as confidentiality agreements and
proprietary information agreements with vendors, employees,
consultants, and others who have access to our proprietary
information. Protection of our intellectual property often
affords us the opportunity to enhance our position in the
marketplace by precluding our competitors from using or
otherwise exploiting our technology and brands. We are also a
party to several intellectual property license agreements
relating to certain of our products. For example, several of our
products are covered by patents which we license from Numico.
The scope and duration of our intellectual property protection
varies throughout the world by jurisdiction and by individual
product.

Properties

As of March 31, 2006, there were 5,817 GNC store locations
globally. In our Retail segment, all but one of our
company-owned stores are located on leased premises that
typically range in size from 1,000 to 2,000 square feet. In
our Franchise segment, substantially all of our franchised
stores in the United States and Canada are located on premises
we lease and then sublease to our respective franchisees. All of
our franchised stores in 45 international markets are owned or
leased directly by our franchisees. No single store is material
to our operations.

As of March 31, 2006, our company-owned and franchised
stores in the United States and Canada (excluding
store-within-a-store locations) and our other international
franchised stores consisted of:

In our Manufacturing/ Wholesale segment, we lease facilities for
manufacturing, packaging, warehousing, and distribution
operations. We manufacture a majority of our proprietary
products at a 230,000 square foot facility in Greenville,
South Carolina. We also lease a 630,000 square foot complex

located in Anderson, South Carolina, for packaging, materials
receipt, lab testing, warehousing, and distribution. Both the
Greenville and Anderson facilities are leased on a long-term
basis pursuant to
fee-in-lieu-of-taxes
arrangements with the counties in which the facilities are
located, but we retain the right to purchase each of the
facilities at any time during the lease for $1.00, subject to a
loss of tax benefits. We lease a 210,000 square foot
distribution center in Leetsdale, Pennsylvania and a
112,000 square foot distribution center in Phoenix,
Arizona. We also lease space at a distribution center in Canada.
We conduct additional manufacturing for wholesalers and
retailers of third-party products, as well as warehouse certain
third-party products at a leased facility located in New South
Wales, Australia.

We lease four small regional sales offices in Clearwater,
Florida; Fort Lauderdale, Florida; Tusin, California; and
Mississauga, Ontario. None of the regional sales offices is
larger than 5,000 square feet. Our 253,000 square foot
corporate headquarters in Pittsburgh, Pennsylvania is owned by
Gustine Sixth Avenue Associates, Ltd., a Pennsylvania limited
partnership, of which General Nutrition, Incorporated, one of
our subsidiaries, is a 50% limited partner. The
partnerships ownership of the land and buildings, and the
partnerships interest in the ground lease to General
Nutrition, Incorporated, are all encumbered by a mortgage in the
original principal amount of $17.9 million, with an
outstanding balance of $11.9 million as of March 31,
2006. This partnership is included in our consolidated financial
statements.

Insurance and Risk Management

We purchase insurance to cover standard risks in the nutritional
supplements industry, including policies to cover general
products liability, workers compensation, auto liability, and
other casualty and property risks. Our insurance rates are
dependent upon our safety record as well as trends in the
insurance industry. We also maintain workers compensation
insurance and auto insurance policies that are retrospective in
that the cost per year will vary depending on the frequency and
severity of claims in the policy year. Prior to the Numico
acquisition, we were covered by some of Numicos insurance
policies. Following the completion of the Numico acquisition, we
obtained our own insurance policies to replace those Numico
policies, including policies for general product liability. We
currently maintain product liability insurance and general
liability insurance.

We face an inherent risk of exposure to product liability claims
in the event that, among other things, the use of products sold
by GNC results in injury. With respect to product liability
coverage, we carry insurance coverage typical of our industry
and product lines. Our coverage involves self-insured retentions
with primary and excess liability coverage above the retention
amount. We have the ability to refer claims to most of our
vendors and their insurers to pay the costs associated with any
claims arising from such vendors products. In most cases,
our insurance covers such claims that are not adequately covered
by a vendors insurance and provides for excess secondary
coverage above the limits provided by our product vendors.

We self-insure certain property and casualty risks due to our
analysis of the risk, the frequency and severity of a loss and
the cost of insurance for the risk. We believe that the amount
of self-insurance is not significant and will not have an
adverse impact on our performance. In addition, we may from time
to time self-insure liability with respect to specific
ingredients in products that we may sell.

Legal Proceedings

We are engaged in various legal actions, claims, and proceedings
arising out of the normal course of business, including claims
related to breach of contracts, product liabilities,
intellectual property matters, and employment-related matters
resulting from our business activities. As is inherent with most
actions such as these, an estimation of any possible and/or
ultimate liability cannot always be determined. We continue to
assess our requirement to account for additional contingencies
in accordance with SFAS No. 5, Accounting for
Contingencies. We believe that the amount of any potential
liability resulting from these actions, when taking into
consideration our general and product liability coverage,
including indemnification obligations of third-party
manufacturers, and the indemnification provided by Numico under
the purchase agreement entered into in connection with Numico
acquisition, will not have a

material adverse impact on our financial position, results of
operations, or liquidity. However, if we are required to make a
payment in connection with an adverse outcome in these matters,
it could have a material impact on our financial condition and
operating results.

As a manufacturer and retailer of nutritional supplements and
other consumer products that are ingested by consumers or
applied to their bodies, we have been and are currently
subjected to various product liability claims. Although the
effects of these claims to date have not been material to us, it
is possible that current and future product liability claims
could have a material adverse impact on our financial condition
and operating results. We currently maintain product liability
insurance with a deductible/retention of $1.0 million per
claim with an aggregate cap on retained loss of
$10.0 million. We typically seek and have obtained
contractual indemnification from most parties that supply raw
materials for our products or that manufacture or market
products we sell. We also typically seek to be added, and have
been added, as additional insured under most of such
parties insurance policies. We are also entitled to
indemnification by Numico for certain losses arising from claims
related to products containing ephedra or Kava Kava sold prior
to December 5, 2003. However, any such indemnification or
insurance is limited by its terms, and any such indemnification,
as a practical matter, is limited to the creditworthiness of the
indemnifying party and its insurer, and the absence of
significant defenses by the insurers. We may incur material
products liability claims, which could increase our costs and
adversely affect our reputation, revenues, and operating income.

Ephedra (Ephedrine Alkaloids). As of December 31,
2005 and March 31, 2006, we had been named as a defendant
in 227 pending cases involving the sale of third-party
products that contain ephedra. Of those cases, one involves a
proprietary GNC product. Ephedra products have been the subject
of adverse publicity and regulatory scrutiny in the United
States and other countries relating to alleged harmful effects,
including the deaths of several individuals. In early 2003, we
instructed all of our locations to stop selling products
containing ephedra that were manufactured by GNC or one of its
affiliates. Subsequently, we instructed all of our locations to
stop selling any products containing ephedra by June 30,
2003. In April 2004, the FDA banned the sale of products
containing ephedra. All claims to date have been tendered to the
third-party manufacturer or to our insurer, and we have incurred
no expense to date with respect to litigation involving ephedra
products. Furthermore, we are entitled to indemnification by
Numico for certain losses arising from claims related to
products containing ephedra sold prior to December 5, 2003.
All of the pending cases relate to products sold prior to such
time and, accordingly, we are entitled to indemnification from
Numico for all of the pending cases.

Pro-Hormone/ Androstenedione Cases. We are currently
defending against certain class action lawsuits (the Andro
Actions) relating to the sale by GNC of certain
nutritional products alleged to contain the ingredients commonly
known as Androstenedione, Androstenediol, Norandrostenedione,
and Norandrostenediol (collectively, Andro
Products). In each case, plaintiffs seek to certify a
class and obtain damages on behalf of the class representatives
and all those similarly-situated who purchased certain
nutritional supplements from us alleged to contain Andro
Products. The original state court proceedings for the Andro
Actions include the following:

Harry Rodriguez v. General Nutrition Companies, Inc.
(previously pending in the Supreme Court of the State of New
York, New York County, New York, Index No. 02/126277).
Plaintiffs filed this putative class action on or about
July 25, 2002. The Second Amended Complaint, filed
thereafter on or about December 6, 2002, alleged claims for
unjust enrichment, violation of General Business Law
§ 349 (misleading and deceptive trade practices), and
violation of General Business Law § 350 (false
advertising). On July 2, 2003, the court granted part of
our motion to dismiss and dismissed the unjust enrichment cause
of action. On January 4, 2006, the court conducted a
hearing on our motion for summary judgment and plaintiffs
motion for class certification, both of which remain pending.

Everett Abrams v. General Nutrition Companies, Inc.
(previously pending in the Superior Court of New Jersey,
Mercer County, New Jersey, Docket No. L-3789-02).
Plaintiffs filed this putative class action on or about
July 25, 2002. The Second Amended Complaint, filed
thereafter on or about December 20, 2002, alleged claims
for false and deceptive marketing claims and omissions and

violations of the New Jersey Consumer Fraud Act. On
November 18, 2003, the court signed an order dismissing
plaintiffs claims for affirmative misrepresentation and
sponsorship with prejudice. The claim for knowing omissions
remains pending.

Abrams, et al. v. General Nutrition Companies,
Inc., et al. (previously pending in the Common Pleas
Court of Philadelphia County, Philadelphia, Class Action
No. 02-703886). Plaintiffs filed this putative class action
on or about July 25, 2002. The Amended Complaint, filed
thereafter on or about April 8, 2003, alleged claims for
violations of the Unfair Trade Practices and Consumer Protection
Law, and unjust enrichment. The court denied the
plaintiffs motion for class certification, and that order
has been affirmed on appeal. Plaintiffs thereafter filed a
petition in the Pennsylvania Supreme Court asking that the court
consider an appeal of the order denying class certification. The
Pennsylvania Supreme Court has not yet ruled on the petition.

David Pio and Ty Stephens, individually and on behalf of all
others similarly situated v. General Nutrition Companies,
Inc. (previously pending in the Circuit Court of Cook
County, Illinois, County Department, Chancery Division, Case
No. 02-CH-14122). Plaintiffs filed this putative class
action on or about July 25, 2002. The Amended Complaint,
filed thereafter on or about April 4, 2004, alleged claims
for violations of the Illinois Consumer Fraud Act, and unjust
enrichment. The motion for class certification was stricken, but
the court afforded leave to the Plaintiffs to file another
motion. Plaintiffs have not yet filed another motion.

Santiago Guzman, individually, on behalf of all others
similarly situated, and on behalf of the general public v.
General Nutrition Companies, Inc. (previously pending on the
California Judicial Counsel Coordination Proceeding
No. 4363, Los Angeles County Superior Court). Plaintiffs
filed this putative class action on or about February 17,
2004. The Amended Complaint, filed on or about May 26,
2005, alleged claims for violations of the Consumers Legal
Remedies Act, violation of the Unfair Competition Act, and
unjust enrichment. These claims remain pending.

On April 17 and 18, 2006, we filed pleadings seeking to
remove each of the Andro Actions to the respective federal
district courts for the districts in which the respective Andro
Actions are pending. At the same time, we filed motions seeking
to transfer each of the Andro Actions to the United States
District Court for the Southern District of New York so that
they may be consolidated with the recently-commenced bankruptcy
case of MuscleTech Research and Development, Inc. and certain of
its affiliates, which is currently pending in the Superior Court
of Justice, Ontario, Canada under the Companies
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended,
Case No. 06-CL-6241, with a related proceeding styled In re
MuscleTech Research and Development, Inc., et al., Case
No. 06 Civ 538 (JSR) and pending in district court in
the Southern District of New York pursuant to chapter 15 of
title 11 of the United States Code. We believe that the
pending Andro Actions are related to MuscleTechs
bankruptcy case by virtue of the fact that MuscleTech is
contractually obligated to indemnify us for certain liabilities
arising from the standard product indemnity stated in our
purchase order terms and conditions or otherwise under state
law. Our requests to remove, transfer, and consolidate the Andro
Actions to federal court are pending before the respective
federal districts court.

Based upon the information available to us at the present time,
we believe that these matters will not have a material adverse
effect upon our liquidity, financial condition, or results of
operations.

Class Action Settlement. Five class action lawsuits
were filed against us in the state courts of Alabama,
California, Illinois, and Texas with respect to claims that the
labeling, packaging, and advertising with respect to a
third-party product sold by us were misleading and deceptive. We
deny any wrongdoing and are pursuing indemnification claims
against the manufacturer. As a result of mediation, the parties

have agreed to a national settlement of the lawsuits, which has
been preliminarily approved by the court. Notice to the class
will be published in mass advertising media publications. In
addition, notice has been mailed to approximately
2.4 million GNC Gold Card members. Each person who
purchased the third-party product and who is part of the class
will receive a cash reimbursement equal to the retail price
paid, net of sales tax, upon presentation to us of a cash
register receipt as proof of purchase. If a person purchased the
product, but does not have a cash register receipt, such a
person may submit a signed affidavit and will then be entitled
to receive one or more coupons. The number of coupons will be
based on the total amount of purchases of the product subject to
a maximum of five coupons per purchaser. Each coupon will have a
cash value of $10.00 valid toward any purchase of $25.00 or more
at a GNC store. The coupons will not be redeemable by any GNC
Gold Card member during Gold Card Week and will not be
redeemable for products subject to any other price discount. The
coupons are to be redeemed at point of sale and are not mail-in
rebates. They will be redeemable for a
90-day period after the
settlement is final. We will issue a maximum of five million
certificates with a combined face value of $50.0 million.
In addition to the cash reimbursements and coupons, as part of
the settlement we will be required to pay legal fees of
approximately $1.0 million and will incur $0.7 million
in 2006 for advertising and postage costs related to the
notification letters; as a result $1.7 million was accrued
as legal costs at December 31, 2005. The deadline for class
members to opt out of the settlement class or object to the
terms of the settlement is July 6, 2006. A final fairness
hearing is scheduled to take place on November 6, 2006.

Nutrition 21. On June 23, 2005, General
Nutrition Corporation, one of our wholly owned subsidiaries, was
sued by Nutrition 21, LLC in the United States District
Court for the Eastern District of Texas. Nutrition 21 alleges
that the GNC subsidiary has infringed, and is continuing to
infringe, United States Patent No. 5,087,623, United States
Patent No. 5,087,624, and United States Patent
No. 5,175,156, all of which are entitled Chromic Picolinate
Treatment, by offering for sale, selling, marketing,
advertising, and promoting finished chromium picolinate products
for uses set forth in these patents. Nutrition 21 has
requested an injunction prohibiting the GNC subsidiary from
infringing these patents and is seeking recovery of unspecified
damages resulting from the infringement, including lost profits.
Nutrition 21 asserts that lost profits should be trebled
due to the GNC subsidiarys alleged willful infringement,
together with attorneys fees, interest, and costs. We
dispute the claims and intend to contest this suit vigorously.
In its answer and counterclaims, the GNC subsidiary has
asserted, and is seeking a declaratory judgment, that these
patents are invalid, not infringed, and unenforceable. The GNC
subsidiary has also asserted counterclaims in the suit for false
patent marking and false advertising. A hearing on claim
construction issues was held on April 20, 2006, but the
courts claim construction order has not yet been issued.
The parties are presently pursuing discovery. The case is set
for trial on December 11, 2006.

Franklin Publications. On October 26, 2005, General
Nutrition Corporation was sued in the Common Pleas Court of
Franklin County, Ohio by Franklin Publications, Inc. The case
was subsequently removed to the United States District Court for
the Southern District of Ohio, Eastern Division. The lawsuit is
based upon the GNC subsidiarys termination, effective as
of December 31, 2005, of two contracts for the publication
of two monthly magazines mailed to GNC customers. Franklin is
seeking a declaratory judgment as to its rights and obligations
under the contracts and monetary damages for the GNC
subsidiarys alleged breach of the contracts. Franklin also
alleges that the GNC subsidiary has interfered with
Franklins business relationships with the advertisers in
the publications, who are primarily GNC vendors, and has been
unjustly enriched. Franklin does not specify the amount of
damages sought, only that they are in excess of $25,000. We
dispute the claims and intend to vigorously defend the lawsuit.
We believe that the lawsuit will not have a material adverse
effect on our liquidity, financial condition, or results of
operations.

Visa/ MasterCard Antitrust Litigation. The terms of a
significant portion of the Visa/ MasterCard antitrust litigation
settlement were finalized during 2005. Accordingly, we
recognized a $1.2 million gain in December 2005 for our
expected portion of the proceeds and we expect to collect this
settlement in 2006.

The Commonwealth of Pennsylvania has conducted an unclaimed
property audit of General Nutrition, Inc., one of our wholly
owned subsidiaries, for the period January 1, 1992 to
December 31, 1997 generally and January 1, 1992 to
December 31, 1999 for payroll and wages. As a result of the
audit, the Pennsylvania Treasury Department has made an
assessment of an alleged unclaimed property liability of the
subsidiary in the amount of $4.1 million. The subsidiary
regularly records normal course liabilities for actual unclaimed
properties and does not agree with the assessment. The
subsidiary filed an appeal, is waiting for a response, and will
vigorously defend against the assessment. We believe the matter
will not have a material adverse effect on our liquidity,
financial condition, or results of operations.

Government Regulation

Product Regulation

Domestic

The processing, formulation, manufacturing, packaging, labeling,
advertising, and distribution of our products are subject to
regulation by one or more federal agencies, including the Food
and Drug Administration, the FTC, the Consumer Product Safety
Commission, the United States Department of Agriculture, and the
Environmental Protection Agency. These activities are also
regulated by various agencies of the states and localities in
which our products are sold. Pursuant to the Federal Food, Drug,
and Cosmetic Act (FDCA), the FDA regulates the
formulation, safety, manufacture, packaging, labeling, and
distribution of dietary supplements, (including vitamins,
minerals, and herbs), and
over-the-counter drugs.
The FTC has jurisdiction to regulate the advertising of these
products.

The FDCA has been amended several times with respect to dietary
supplements, in particular by the Dietary Supplement Health and
Education Act of 1994 (DSHEA). DSHEA established a
new framework governing the composition, safety, labeling and
marketing of dietary supplements. Dietary
supplements are defined as vitamins, minerals, herbs,
other botanicals, amino acids and other dietary substances for
human use to supplement the diet, as well as concentrates,
metabolites, constituents, extracts or combinations of such
dietary ingredients. Generally, under DSHEA, dietary ingredients
that were on the market prior to October 15, 1994 may be
used in dietary supplements without notifying the FDA.
New dietary ingredients (i.e., dietary ingredients
that were not marketed in the United States before
October 15, 1994) must be the subject of a new
dietary ingredient notification submitted to the FDA unless the
ingredient has been present in the food supply as an
article used for food without being chemically
altered. A new dietary ingredient notification must
provide the FDA evidence of a history of use or other
evidence of safety establishing that use of the dietary
ingredient will reasonably be expected to be safe. A
new dietary ingredient notification must be submitted to the FDA
at least 75 days before the initial marketing of the new
dietary ingredient. There is no certainty that the FDA will
accept any particular evidence of safety for any new dietary
ingredient. The FDAs refusal to accept such evidence could
prevent the marketing of such dietary ingredients.

The FDA issued a consumer warning in 1996, followed by proposed
regulations in 1997, covering dietary supplements that contain
ephedra or an active substance, ephedrine alkaloids. In February
2003 the Department of Health and Human Services announced a
series of actions that the Department of Health and Human
Services and the FDA planned to execute with respect to products
containing ephedra, including the solicitation of evidence
regarding the significant or unreasonable risk of illness or
injury from dietary supplements containing ephedra and the
immediate execution of a series of actions against ephedra
products making unsubstantiated claims about sports performance
enhancement. In addition, many states proposed regulations and
three states enacted laws restricting the promotion and
distribution of ephedra-containing dietary supplements. The
botanical ingredient ephedra was formerly used in several
third-party and private label dietary supplement products. In
January 2003, we began focusing our diet category on products
that would replace ephedra products. In early 2003, we
instructed all of our locations to stop selling products
containing ephedra that were manufactured by GNC or one of our
affiliates. Subsequently, we instructed all of our locations to
stop selling any products containing ephedra by June 30,
2003. Sales of products containing ephedra amounted to
approximately $35.2 million or 3.3% of our retail sales in
2003

and $182.9 million, or 17.1% of our retail sales in 2002.
In February 2004, the FDA issued a final regulation declaring
dietary supplements containing ephedra illegal under the FDCA
because they present an unreasonable risk of illness or injury
under the conditions of use recommended or suggested in
labeling, or if no conditions of use are suggested or
recommended in labeling, under ordinary conditions of use. The
rule took effect April 12, 2004 and banned the sale of
dietary supplement products containing ephedra. Similarly, the
FDA issued a consumer advisory in 2002 with respect to dietary
supplements that contain the ingredient Kava, and the FDA is
currently investigating adverse effects associated with
ingestion of this ingredient. One of our subsidiaries, Nutra
Manufacturing, Inc. manufactured products containing Kava Kava
from December 1995 until August 2002. All stores were instructed
to stop selling products containing Kava Kava in December 2002.
The FDA could take similar actions against other products or
product ingredients which it determines present an unreasonable
health risk to consumers.

DSHEA permits statements of nutritional support to
be included in labeling for dietary supplements without FDA
pre-market approval. Such statements must be submitted to the
FDA within 30 days of marketing and must bear a label
disclosure that This statement has not been evaluated by
the Food and Drug Administration. This product is not intended
to diagnose, treat, cure, or prevent any disease. Such
statements may describe how a particular dietary ingredient
affects the structure, function or general well-being of the
body, or the mechanism of action by which a dietary ingredient
may affect body structure, function or well-being, but may not
expressly or implicitly represent that a dietary supplement will
diagnose, cure, mitigate, treat or prevent a disease. A company
that uses a statement of nutritional support in labeling must
possess scientific evidence substantiating that the statement is
truthful and not misleading. If the FDA determines that a
particular statement of nutritional support is an unacceptable
drug claim or an unauthorized version of a health
claim, or, if the FDA determines that a particular claim
is not adequately supported by existing scientific data or is
false or misleading, we would be prevented from using the claim.

In addition, DSHEA provides that so-called third-party
literature, e.g., a reprint of a peer-reviewed scientific
publication linking a particular dietary ingredient with health
benefits, may be used in connection with the sale of a
dietary supplement to consumers without the literature
being subject to regulation as labeling. The literature:
(1) must not be false or misleading; (2) may not
promote a particular manufacturer or brand of
dietary supplement; (3) must present a balanced view of the
available scientific information on the subject matter;
(4) if displayed in an establishment, must be physically
separate from the dietary supplements; and (5) should not
have appended to it any information by sticker or any other
method. If the literature fails to satisfy each of these
requirements, we may be prevented from disseminating such
literature with our products, and any dissemination could
subject our product to regulatory action as an illegal drug.

We expect that the FDA will adopt in the near future the final
regulations, proposed on March 13, 2003, regarding Good
Manufacturing Practice in manufacturing, packing or holding
dietary ingredients and dietary supplements authorized by DSHEA.
These regulations would require dietary supplements to be
prepared, packaged and held in compliance with certain rules and
might require quality control provisions similar to those in the
Good Manufacturing Practice regulations for drugs. We or our
third-party suppliers or vendors may not be able to comply with
the new rules without incurring substantial additional expenses.
In addition, if our third-party suppliers or vendors are not
able to timely comply with the new rules, we may experience
increased costs or delays in obtaining certain raw materials and
third-party products.

The FDA has broad authority to enforce the provisions of the
FDCA applicable to dietary supplements, including powers to
issue a public warning letter to a company, to publicize
information about illegal products, to request a recall of
illegal products from the market and to request the Department
of Justice to initiate a seizure action, an injunction action or
a criminal prosecution in the United States courts. The
regulation of dietary supplements may increase or become more
restrictive in the future.

Legislation is pending in the Senate under S. 1137 and in the
House of Representatives under H.R. 3156 which if passed would
impose substantial new regulatory requirements for dietary
supplements. S. 1137 seeks to subject the dietary ingredient,
dehydroepiandrosterone (DHEA), to the requirements of

the Controlled Substances Act, which would prevent our ability
to sell products containing DHEA. H.R. 3156 seeks to impose
adverse event reporting, product listing with the FDA and other
requirements. Key members of Congress and the dietary supplement
industry have indicated that they have reached agreement to
support legislation requiring adverse event reporting related to
serious adverse events. If enacted, S. 1137 and H.R. 3156
would raise our costs and hinder our business. In October 2004,
legislation was passed subjecting specified substances formerly
used in some dietary supplements, such as androstenedione or
andro, to the requirements of the Controlled
Substances Act. Under the 2004 law, these substances can no
longer be sold as dietary supplements.

The FTC exercises jurisdiction over the advertising of dietary
supplements. In recent years, the FTC has instituted numerous
enforcement actions against dietary supplement companies for
failure to have adequate substantiation for claims made in
advertising or for the use of false or misleading advertising
claims. We continue to be subject to three consent orders issued
by the FTC. In 1984, the FTC instituted an investigation of
General Nutrition, Incorporated, one of our subsidiaries,
alleging deceptive acts and practices in connection with the
advertising and marketing of certain of its products. General
Nutrition, Incorporated accepted a proposed consent order which
was finalized in 1989, under which it agreed to refrain from,
among other things, making certain claims with respect to
certain of its products unless the claims are based on and
substantiated by reliable and competent scientific evidence. We
also entered into a consent order in 1970 with the FTC, which
generally addressed iron deficiency anemia type
products. As a result of routine monitoring by the FTC, disputes
arose concerning its compliance with these orders and with
regard to advertising for certain hair care products. While
General Nutrition, Incorporated believes that, at all times, it
operated in material compliance with the orders, it entered into
a settlement in 1994 with the FTC to avoid protracted
litigation. As a part of this settlement, General Nutrition,
Incorporated entered into a consent decree and paid, without
admitting liability, a civil penalty in the amount of
$2.4 million and agreed to adhere to the terms of the 1970
and 1989 consent orders and to abide by the provisions of the
settlement document concerning hair care products. We do not
believe that future compliance with the outstanding consent
decrees will materially affect our business operations. In 2000,
the FTC amended the 1970 order to clarify language in the 1970
order that was believed to be ambiguous and outmoded.

The FTC continues to monitor our advertising and, from time to
time, requests substantiation with respect to such advertising
to assess compliance with the various outstanding consent
decrees and with the Federal Trade Commission Act. Our policy is
to use advertising that complies with the consent decrees and
applicable regulations. We review all products brought into our
distribution centers to assure that such products and their
labels comply with the consent decrees. We also review the use
of third-party point of purchase materials such as store signs
and promotional brochures. Nevertheless, there can be no
assurance that inadvertent failures to comply with the consent
decrees and applicable regulations will not occur. Some of the
products sold by franchised stores are purchased by franchisees
directly from other vendors and these products do not flow
through our distribution centers. Although franchise contracts
contain strict requirements for store operations, including
compliance with federal, state and local laws and regulations,
we cannot exercise the same degree of control over franchisees
as we do over our company-owned stores. As a result of our
efforts to comply with applicable statutes and regulations, we
have from time to time reformulated, eliminated or relabeled
certain of our products and revised certain provisions of our
sales and marketing program. We believe we are in material
compliance with the various consent decrees and with applicable
federal, state and local rules and regulations concerning our
products and marketing program. Compliance with the provisions
of national, state and local environmental laws and regulations
has not had a material effect upon our capital expenditures,
earnings, financial position, liquidity or competitive position.

Foreign

Our products sold in foreign countries are also subject to
regulation under various national, local and international laws
that include provisions governing, among other things, the
formulation, manufacturing, packaging, labeling, advertising and
distribution of dietary supplements and
over-the-counter drugs.

Government regulations in foreign countries may prevent or delay
the introduction, or require the reformulation, of certain of
our products.

We cannot determine what effect additional domestic or
international governmental legislation, regulations or
administrative orders, when and if promulgated, would have on
our business in the future. New legislation or regulations may
require the reformulation of certain products to meet new
standards, require the recall or discontinuance of certain
products not capable of reformulation, impose additional record
keeping or require expanded documentation of the properties of
certain products, expanded or different labeling or scientific
substantiation.

Franchise Regulation

We must comply with regulations adopted by the FTC and with
several state laws that regulate the offer and sale of
franchises. The FTCs Trade Regulation Rule on
Franchising and certain state laws require that we furnish
prospective franchisees with a franchise offering circular
containing information prescribed by the Trade
Regulation Rule on Franchising and applicable state laws
and regulations.

We also must comply with a number of state laws that regulate
some substantive aspects of the franchisor-franchisee
relationship. These laws may limit a franchisors business
practices in a number of ways, including limiting the ability to:



terminate or not renew a franchise without good cause;



interfere with the right of free association among franchisees;



disapprove the transfer of a franchise;



discriminate among franchisees with regard to charges,
royalties, and other fees; and



place new stores near existing franchises.

To date, these laws have not precluded us from seeking
franchisees in any given area and have not had a material
adverse effect on our operations. Bills intended to regulate
certain aspects of franchise relationships have been introduced
into Congress on several occasions during the last decade, but
none have been enacted.

Our international franchise agreements and franchise operations
are regulated by various foreign laws, rules and regulations. To
date, these laws have not precluded us from seeking franchisees
in any given area and have not had a material adverse effect on
our operations.

Environmental Compliance

We are subject to numerous federal, state, local, and foreign
environmental laws and regulations governing our operations,
including the handling, transportation and disposal of our
products and our non-hazardous and hazardous substances and
wastes, as well as emissions and discharges into the
environment, including discharges to air, surface water and
groundwater. Failure to comply with such laws and regulations
could result in costs for corrective action, penalties or the
imposition of other liabilities. Changes in laws or the
interpretation thereof or the development of new facts could
also cause us to incur additional capital and operation
expenditures to maintain compliance with environmental laws and
regulations. We also are subject to laws and regulations that
impose liability and cleanup responsibility for releases of
hazardous substances into the environment without regard to
fault or knowledge about the condition or action causing the
liability. Under certain of these laws and regulations, such
liabilities can be imposed for cleanup of previously owned or
operated properties, or properties to which substances or wastes
were sent by current or former operations at our facilities. The
presence of contamination from such substances or wastes could
also adversely affect our ability to sell or lease our
properties, or to use them as collateral for financing. From
time to time, we have incurred costs and obligations for
correcting environmental noncompliance matters and for
remediation at or relating to certain of our properties. We
believe we have complied with, and are currently complying with,
our environmental obligations to date and that such liabilities
will not have a material adverse effect on our business or
financial performance. However, it is difficult to predict
future liabilities and obligations which could be material.

We are a holding company and all of our operations are conducted
through our operating subsidiaries. We were formed as a Delaware
corporation in November 2003 by Apollo Management V, an
affiliate of Apollo Management V, and members of our management,
to acquire General Nutrition Companies, Inc. from Numico.
General Nutrition Companies, Inc. was founded in 1935 by David
Shakarian who opened its first health food store in Pittsburgh,
Pennsylvania. Since that time, the number of stores continued to
grow, and General Nutrition Companies, Inc. began producing its
own vitamin and mineral supplements as well as foods, beverages,
and cosmetics. General Nutrition Companies, Inc. was acquired in
August 1999 by Numico Investment Corp., and prior to its
acquisition, was a publicly traded company listed on the Nasdaq
National Market.

On December 5, 2003, Centers purchased all of the
outstanding equity interests of General Nutrition Companies,
Inc. from Numico. In this prospectus, we refer to this
acquisition as the Numico acquisition. Simultaneously with the
closing of the Numico acquisition, Centers entered into a new
senior credit facility with a syndicate of lenders, consisting
of a term loan facility and a revolving credit facility, to fund
a portion of the purchase price of the Numico acquisition. We
have guaranteed Centers obligations under the senior
credit facility. Centers also issued senior subordinated notes
to fund a portion of the purchase price of the Numico
acquisition. In addition, GNC Investors, LLC, our principal
stockholder, made an equity contribution to us in exchange for
our common and preferred stock. We contributed the full amount
of the equity contribution to Centers to fund a portion of the
purchase price of the Numico acquisition. GNC Investors, LLC
subsequently resold all of our preferred stock to other
institutional investors.

Our principal stockholder, who is a selling stockholder in this
offering, held approximately 97% of our outstanding common stock
as of May 31, 2006. Apollo Funds V and other institutional
investors own all of the equity interests of our principal
stockholder. Apollo Funds V own approximately 76% of the equity
interests. After giving effect to this offering, our principal
stockholder will
hold %
of our common stock,
or %
if the underwriters overallotment option is exercised in
full. See Principal and Selling Stockholders.

The following table sets forth certain information regarding our
directors and executive officers and key executive officers of
our subsidiaries as of May 31, 2006.

Name

Age

Position

Robert J. DiNicola

58

Executive Chairman of the Board of Directors(1)

Joseph Fortunato

53

Director, President, and Chief Executive Officer

Curtis J. Larrimer

51

Executive Vice President and Chief Financial Officer

Mark L. Weintrub

45

Senior Vice President, Chief Legal Officer, and Secretary

Tom Dowd

43

Senior Vice President and General Manager of Retail Operations

Lee Karayusuf

55

Senior Vice President of Distribution and Transportation

Michael Locke

60

Senior Vice President of Manufacturing

Darryl Green

45

Senior Vice President of Domestic Franchising

Reginald N. Steele

60

Senior Vice President of International Franchising

Susan Trimbo

51

Senior Vice President of Scientific Affairs

Michael S. Cohen

29

Director(2)

Laurence M. Berg

40

Director

Peter P. Copses

47

Director(3)

George G. Golleher

58

Director(3)

Joseph W. Harch

52

Director(2)

Andrew S. Jhawar

34

Director(3)

Edgardo A. Mercadante

50

Director(2)

(1)

Each director is a member of the board of directors of both GNC
and Centers.

(2)

Member of audit committee of both GNC and Centers.

(3)

Member of compensation committee of both GNC and Centers.

Robert J. DiNicola has been a member of our board of
directors since December 2003 and became Executive Chairman of
our board of directors in October 2004. He served as our interim
Chief Executive Officer from December 2004 to May 2005.
Mr. DiNicola currently also serves as the Chairman of the
Board and Chief Executive Officer of Linens n Things,
Inc., a large format specialty retailer of home textiles,
housewares, and home accessories which is controlled by
affiliates of Apollo Advisors, L.P. He is a
34-year veteran of the
retail industry and is the former Chairman of the Board of
Directors of Zale Corporation, a specialty retailer of fine
jewelry. Mr. DiNicola joined Zale Corporation as its
Chairman and Chief Executive Officer in April 1994. In July
1999, Mr. DiNicola relinquished his position as Chief
Executive Officer of Zale Corporation and as an officer of the
company the following year, but remained a member of the board.
At the request of the Board, he rejoined Zale Corporation in
February 2001 as Chairman and Chief Executive Officer.
Mr. DiNicola subsequently relinquished his position as
Chief Executive Officer of Zale Corporation in August 2002 but
retained his position as Chairman of the Board until March 2004.
Prior to joining Zale Corporation, Mr. DiNicola served as
the Chairman and Chief Executive Officer of Bon Marche, a
division of Federated Department Stores, located in Seattle,
Washington. Mr. DiNicola also serves as the Senior Retail
Analyst for Apollo Management V and

affiliates. Beginning his retail career in 1972,
Mr. DiNicola is also a veteran of Macys, May Company,
and Federated Department Stores. He has held numerous executive
positions in buying, merchandising and store operations across
the country during his retail career.

Joseph Fortunato became our President and Chief Executive
Officer in November 2005. He became a member of our board of
directors on June 1, 2006. He served as our Executive Vice
President and Chief Operating Officer beginning in December 2003
and was promoted to Senior Executive Vice President in June
2005. Since November 2005, Mr. Fortunato has also served as
President and Chief Executive Officer of General Nutrition
Companies, Inc., having previously served as Executive Vice
President and Chief Operating Officer since November 2001. From
October 2000 until November 2001, he served as its Executive
Vice President of Retail Operations and Store Development.
Mr. Fortunato began his employment with General Nutrition
Companies, Inc. in October 1990 and has held various positions,
including Senior Vice President of Store Development and
Operations from 1998 until 2000, Vice President of Financial
Operations from 1997 until 1998, and Director of Financial
Operations from 1990 until 1997.

Curtis J. Larrimer became an Executive Vice President in
March 2005 and continues to serve as our Chief Financial Officer
after having served as Senior Vice President of Finance and
Chief Financial Officer of GNC since December 2004 and
previously our Corporate Controller since February 2004. From
August 2001 to December 2004, Mr. Larrimer also served as
Senior Vice President of Finance and Corporate Controller of
General Nutrition Companies, Inc. From January 1995 until August
2001, Mr. Larrimer served as Vice President and Controller
of General Nutrition Companies, Inc. He began his employment
with General Nutrition, Incorporated in the Budgets and Taxes
department in 1980 and has held various positions, including
Controller of the Retail and Manufacturing/ Wholesale divisions
and Assistant Corporate Controller, Vice President and
Controller.

Mark L. Weintrub became Senior Vice President, Chief
Legal Officer, and Secretary in March 2006. From March 2004 to
March 2006, Mr. Weintrub operated a private law practice
providing general counsel and commercial business legal services
to a wide range of clients. From July 2001 to March 2004, he
served as Vice President Administration, General Counsel, and
Secretary for Authentix Inc., a privately held authentication
solutions and brand protection company based in Dallas, Texas.
From 1999-2001, he served as Vice President Administration,
General Counsel, and Secretary of Ultrak, Inc., a publicly
traded company currently known as MDI, Inc. Mr. Weintrub
was also previously Associate General Counsel/ Corporate Counsel
of Zurn Industries, Inc., currently a wholly owned subsidiary of
publicly traded Jacuzzi Brands, Inc. Mr. Weintrub began his
professional career in private law practice in 1986.

Tom Dowd became Senior Vice President and General Manager
of Retail Operations of General Nutrition Corporation in
December 2005, having served as Senior Vice President of Stores
since March 2003. From March 2001 until March 2003,
Mr. Dowd was President of Healthlabs, LLC, an unaffiliated
contract supplement manufacturing and product consulting
company. From May 2000 until March 2001, Mr. Dowd was
Senior Vice President of Retail Sales and was Division Three
Vice President of General Nutrition Corporation from December
1998 to May 2000.

Lee Karayusuf became Senior Vice President of
Distribution and Transportation of General Nutrition Companies,
Inc. in December 2000 with additional responsibility for its
then affiliates, Rexall Sundown and Unicity. Mr. Karayusuf
served as Manager of Transportation of General Nutrition
Companies, Inc. from December 1991 until March 1994 and Vice
President of Transportation and Distribution from 1994 until
December 2000.

Michael Locke became Senior Vice President of
Manufacturing of Nutra Manufacturing, Inc. in June 2003. From
January 2000 until June 2003, Mr. Locke served as the head
of North American Manufacturing Operations for Numico, the
former parent company of General Nutrition Companies, Inc. From
1994 until 1999, he served as Senior Vice President of
Manufacturing of Nutra Manufacturing, Inc. (f/k/a General
Nutrition Products, Inc.), and from 1991 until 1993, he served
as Vice President of Distribution. From 1986 until 1991,
Mr. Locke served as Director of Distribution of General
Distribution Company, our indirect subsidiary.

Darryl Green became Senior Vice President, Domestic
Franchising of GNC Franchising, LLC in August 2005. From
November 2003 through July 2005, Mr. Green served as our
Division Vice President for the Southeast. From July 2001 until
November 2003, he consulted in the supplement and nutrition
industry and was a member of the board of directors of Health
Nutrition Systems Inc. in West Palm Beach, Florida. From June
1999 until June 2001, Mr. Green was our Vice President of
Retail Sales.

Reginald N. Steele became Senior Vice President of
International Franchising of General Nutrition International,
Inc. in April 2001, having started as a Vice President in March
1994. From 1992 through March 1994, Mr. Steele was
Executive Vice President and Chief Operating Officer of the
Coffee Beanery, Ltd., a
300-unit gourmet coffee
store retailer. From 1989 to 1992, Mr. Steele was employed
as Senior Vice President of Franchising for Shoneys
Restaurants Inc., a casual dining restaurant company. From 1985
to 1989, Mr. Steele was the Director, Vice President and
Executive Vice President of Franchise Operations for
Arbys, Inc., a
2,600-unit fast food
chain.

Susan Trimbo, Ph.D. became Senior Vice President of
Scientific Affairs of General Nutrition Corporation in August
2001. Dr. Trimbo joined General Nutrition Corporation in
June 1999 as Vice President of Scientific Affairs and, between
July 2000 and July 2003, she also provided oversight for all of
Numicos North American nutritional supplement businesses.
Prior to joining General Nutrition Corporation, Dr. Trimbo
worked for Wyeth Consumer Healthcare on its Centrum vitamin
business from January 1997 until June 1999 and for Clintec, a
Nestle S.A./ Baxter Healthcare Medical Nutrition venture, from
January 1985 until January 1997.

Laurence M. Berg has been a member of our board of
directors since October 2005. Since 1992, Mr. Berg has been
a senior partner of Apollo Advisors, L.P. (and, together with
its affiliated entities, including Apollo Management V,
Apollo), a private investment management firm founded in 1990,
which manages the Apollo investment funds. Mr. Berg is also
a director of Educate Inc., Goodman Global Holdings, Inc., and
Rent-A-Center, Inc.

Michael S. Cohen has been a member of our board of
directors since March 2006. Mr. Cohen is a principal of
Apollo, where he has been employed since August 2000. Prior to
joining Apollo, Mr. Cohen was an investment banker in the
Mergers & Acquisitions group of Salomon Smith Barney
since 1998.

Peter P. Copses has been a member of our board of
directors since November 2003 and served as Chairman of
GNCs board of directors until October 2004.
Mr. Copses became a founding senior partner of Apollo in
1990. Mr. Copses is also a director of
Rent-A-Center, Inc. and
Linens n Things, Inc.

George G. Golleher has been a member of our board of
directors since December 2003. Mr. Golleher has been a
business consultant and private equity investor since June 1999,
including serving as a consultant for Apollo. Mr. Golleher
was a director of Simon Worldwide, Inc., a former promotional
marketing company, from September 1999 to April 2006 and was
also its Chief Executive Officer from March 2003 to April 2006.
From March 1998 to May 1999, Mr. Golleher served as
President, Chief Operating Officer, and director of Fred Meyer,
Inc., a food and drug retailer. Prior to joining Fred Meyer,
Inc., Mr. Golleher served for 15 years with Ralphs
Grocery Company until March 1998, ultimately as the Chief
Executive Officer and Vice Chairman of the Board.
Mr. Golleher is a director of Rite Aid Corporation and
Linens n Things, Inc.

Joseph W. Harch has been a member of our board of
directors since February 2004. Mr. Harch was a practicing
Certified Public Accountant from 1974 until 1979 and has been in
the securities business since 1979. Mr. Harch founded Harch
Capital Management, Inc., or HCM, in 1991. At HCM,
Mr. Harch has worked as a research analyst, investment
strategist and portfolio manager for HCMs high yield fixed
income and equity accounts and is currently chairman of
HCMs board of directors. Between 1979 and 1991,
Mr. Harch was a senior investment banker with the firms of
Bateman Eichler, Hill Richards, Prudential Bache Securities,
Drexel Burnham Lambert Incorporated and Donaldson,
Lufkin & Jenrette, Inc. From October 1988 through
February 1990, Mr. Harch was the National High Yield Sales
Manager at Drexel Burnham Lambert Incorporated, where he managed
its high yield sales force and syndicate and

was responsible for new account development and origination.
Mr. Harch is also a director of Nobel Learning Communities,
Inc.

Andrew S. Jhawar has been a member of our board of
directors since November 2003. Mr. Jhawar is a partner of
Apollo, where he has been employed since February 2000. Prior to
joining Apollo, Mr. Jhawar was an investment banker at
Donaldson, Lufkin & Jenrette Securities Corporation
from July 1999 until January 2000 and at Jefferies &
Company, Inc. from August 1993 until December 1997.
Mr. Jhawar is a director of Linens n Things, Inc.

Edgardo A. Mercadante has been a member of our board of
directors since December 2003. Since January 1997,
Mr. Mercadante has served as Chairman and Chief Executive
Officer of Familymeds Group, Inc., a company that operates
specialty clinic-based pharmacies and vitamin centers. In
November 2004 Familymeds Group, Inc. merged with DrugMax, Inc.,
a public specialty drug distributor. Mr. Mercadante serves
as Chairman and CEO of DrugMax. From 1991 to 1996,
Mr. Mercadante was President and Chief Executive Officer of
APP, Inc., a pharmacy benefit management company, which he
co-founded in 1991. Additionally, from 1987 to 1996,
Mr. Mercadante was President and Chief Executive Officer of
Arrow Corp., a franchise pharmacy retailer. From 1987 to 1991,
Mr. Mercadante was Chief Operating Officer of Appell
Management Corp., a company that established licensed pharmacy
outlets in supermarkets. From 1980 to 1986, Mr. Mercadante
was a Division Manager at Rite Aid Corporation.
Mr. Mercadante is also a Director of ProHealth Physicians,
and DrugMax, Inc. d/b/a Familymeds Group, Inc.

Code of Ethics

We have adopted a Code of Ethics applicable to our Chief
Executive Officer and senior financial officers. In addition, we
have adopted a Code of Ethical Business Conduct for all
employees.

Board Composition

Our board of directors is composed of nine directors. Each
director serves for annual terms and until his or her successor
is elected and qualified. Apollo Funds V indirectly control a
majority of our common stock. Pursuant to our stockholders
agreement, so long as Apollo Funds V own at least
2,100,000 shares of common stock and subject to the rights
of the holders of shares of any series of preferred stock,
Apollo Investment Fund V has the right to nominate all of
the members of our board of directors. Each stockholder party to
the stockholders agreement has agreed to vote all of the
shares of common stock owned or held of record by it in favor of
the Apollo Investment Fund V nominees.

Upon the completion of this offering, we will be deemed a
controlled company under the rules of the New York
Stock Exchange, and we will qualify for, and intend to rely on,
the controlled company exemption to the board of
directors and committee composition requirements under the rules
of the NYSE. Pursuant to this exception, we will be exempt from
the requirements that (1) our board of directors be
comprised of a majority of independent directors, (2) we
have a nominating and corporate governance committee composed
entirely of independent directors, (3) our compensation
committee be comprised solely of independent directors, and
(4) we conduct an annual performance evaluation of the
nominating and governance committee and the compensation
committee. The controlled company exception does not
modify the independence requirements for the audit committee,
and we intend to comply with the requirements of the
Sarbanes-Oxley Act and the NYSE rules, which require that our
audit committee be composed of three independent directors
within one year from the date of this prospectus.

Board Committees

The board of directors has the authority to appoint committees
to perform certain management and administration functions. Our
board of directors currently has an audit committee and a
compensation committee. The composition of the board committees
will comply with the requirements of the Sarbanes-Oxley Act and
the NYSE, subject to the NYSEs controlled company
exemption.

The audit committee selects, on behalf of our board of
directors, an independent registered public accounting firm to
be engaged to audit our financial statements, discusses with the
independent auditors their independence, approves the
compensation of the independent registered public accounting
firm, reviews and discusses the audited financial statements
with the independent registered public accounting firm and
management and will recommend to our board of directors whether
the audited financials should be included in our Annual Reports
on Form 10-K to be
filed with the SEC. The audit committee also oversees our
internal audit function. Mr. Mercadante is the chairman of
the audit committee, and Mr. Cohen and Mr. Harch are
the other members of our audit committee. Our board of directors
has determined that Mr. Harch is the audit committee
financial expert serving on our audit committee.
Mr. Mercadante and Mr. Harch are considered
independent directors for purposes of audit committee membership
under NYSE rules. Until one year after the date of this
prospectus, we are required to have a majority of independent
directors on our audit committee. Thereafter, we will be
required to have an audit committee comprised entirely of
independent directors.

Compensation Committee

The compensation committee reviews and either approves, on
behalf of our board of directors, or recommends to the board of
directors for approval the annual salaries and other
compensation of our executive officers and individual stock and
stock option grants. The compensation committee also provides
assistance and recommendations with respect to our compensation
policies and practices and assists with the administration of
our compensation plans. Mr. Jhawar is the chairman of the
compensation committee, and the other members of our
compensation committee are Mr. Copses and Mr. Golleher.

Compensation of Directors

Our chairman of the board of directors and each non-employee
director receive an annual retainer of $40,000 and a stipend of
$2,000 for each board meeting attended in person or $500 for
each meeting attended telephonically. Additionally, non-employee
directors serving on board committees receive a stipend of
$1,000 for each meeting attended in person or $500 for each
meeting attended telephonically. In addition, each non-employee
director, upon election or appointment to the board of directors
will receive a grant of non-qualified stock options to purchase
a minimum of 25,000 shares of our common stock, with the
number to be determined by the board of directors in its
discretion. We have granted each of our current non-employee
directors between 25,000 and 75,000 fully vested options to
purchase shares of our common stock under our 2003 Omnibus Stock
Option Plan for their service on our board of directors upon
each directors appointment, aggregating 225,000 options.

Compensation Committee Interlocks and Insider
Participation

Our board of directors and that of Centers have formed
compensation committees that have identical membership and are
each currently comprised of Messrs. Copses, Jhawar, and
Golleher. Mr. Copses, a member of each compensation
committee, was an executive officer of GNC from its inception in
November 2003 and of Centers from its inception in October 2003,
in each case until his resignation as an executive officer in
February 2004 following completion of the Numico acquisition.
Mr. Copses is a founding senior partner, and
Mr. Jhawar is a partner, of Apollo Management V, an
affiliate of our principal stockholder. Except as described
above, no member of the compensation committee has ever been an
executive officer of GNC or its subsidiaries or been an
affiliate of GNC or one of its affiliates. In the year ended
December 31, 2005, no other executive officer of GNC served
as a director or member of the compensation committee of another
entity whose executive officers served on GNCs board of
directors or compensation committee.

Includes cash amounts received by the named executive officers
for supplemental medical, supplemental retirement, parking,
professional assistance, car allowance, and financial services
assistance. In accordance with applicable SEC rules, any cash
amount exceeding 25% of the total annual compensation for any
year, and any additional items not listed above, are reflected
in the following table: